e-  ; 

REPORT  OF  JOINT  COMMITTEE 


OF  THE 


SENATE  AND  ASSEMBLY 


RELATIVE    TO 


T 


A  X  A  T  I  O  N 


FOR 


STATE  AND  LOCAL  PURPOSES. 


TRANSMITTED    TO    THE     LEGISLATURE     MARCH      17,     1893. 


ALBANY : 

JAMES  B.   LYON,   STATE  PRINTER. 
1893. 


Iffl 


STATE  OF  NEW  YORK. 


No.  69.  x" 

UNIVERSITY 


IN  ASSEMBLY, 

MARCH  17,  1893. 

REPORT 

OF  THE 

JOINT  COMMITTEE  OF  THE  SENATE  AND  ASSEMBLY 
RELATIVE  TO  THE  EXAMINATION  OF  THE  SUB- 
JECT OF  TAXATION  BOTH  FOR  STATE  AND  LOCAL 
PURPOSES,  APPOINTED  IN  1892,  PURSUANT  TO  A 
JOINT  RESOLUTION. 


To  the  Legislature  of  the  State  of  New  York : 

The  Joint  Committee  of  the  Senate  and  Assembly  "  for  the 
purpose  of  examining  into  the  subject  of  taxation  both  for  State 
and  local  purposes,"  appointed  from  those  bodies  in  1892,  pursu- 
ant to  a  joint  resolution,  presents  this  its  final  report : 

Following  the  extension  grante.d  by  the  joint  resolution  of 
1893,  under  a  resolution  which  accompanied  its  preliminary 
report,  and  which  was  duly  adopted,  Mr.  Malby  and  Mr.  Ains- 
worth  were  appointed  by  the  Speaker  of  the  Assembly  to  act  in 
place  of  Mr.  Stranahan  and  Mr.  Gifford,  respectively  thereon, 
and  Mr.  Byrnes  was  subsequently  similarly  added  in  place  of 


Mr.  Quigley,  who  resigned  by  reason  of  his  engagements  as  chair- 
man of  the  committee  on  ways  and  means. 

Your  committee  continued  its  investigation  of  the  subjects 
assigned  for  their  consideration,  and  report,  and  the  examination 
of  witnesses,  and  the  testimony  taken  before  them  is  embraced 
in  916  pages  of  evidence  which  is  submitted  with  the  report. 

The  witnesses  so  appearing  represented,  and  were  selected  for 
their  study  and  knowledge  of  the  wants,  complaints  and  opinions 
of  the  various  sections,  employments  and  industries  of  the  State 
aifected  by  the  important  questions  of  taxation  and  interest,  and 
included  many  of  the  best  informed  public  officials  and  represen- 
tative officers  of  the  associations  formed  for  the  advancement  of 
the  welfare  of  the  agricultural  communities. 

Your  committee  is  pleased  to  be  able  to  add  that  the  con- 
clusions at  which  they  have  arrived,  the  recommendations  which 
they  make  and  the  bills  which  they  offer  to  accompany  this  report 
are  unanimously  sustained  by  its  members,  and  that  they  have 
deemed  it  most  wise  and  expeditious,  where  any  difference  in 
views  existed  amongst  them  upon  topics  properly  embraced 
within  the  subjects  before  them,  to  relieve  the  discussion  of  this 
report  from  all  embarrassment  through  their  presentation. 

By  the  terms  of  the  resolution  creating  your  committee  its 
duty  was  defined  to  be  to  examine  "  the  propriety  of  modifying 
the  present  laws  relating  to  taxation,  assessment  and  interest,  so 
far  as  they  affect  the  agricultural,  manufacturing,  commercial, 
laboring,  banking  and  other  interests  of  the  State ;  as  to  whether 
capital  has  been  or  is  being  driven  from  this  State  by  restrictions 
affecting  corporations,  and,  if  so,  as  to  the  remedy  therefor;  the 
operating  and  effect  of  the  present  tax  laws  of  the  State,  and 
report  to  the  Legislature  at  the  next  annual  session  by  bill,  either 
proposed  new  laws  or  such  proposed  changes  in  or  modifications 
of  existing  laws,  as,  in  their  judgment,  will  increase  the  indirect 
revenues  of  the  State  government,  and,  as  far  as  possible,  equalize 
the  burdens  of  taxation." 


THE  PROPRIETY  OF  MODIFYING  THE  PRESENT  TAX  LAWS. 

The  plan  of  valuation,  assessment  and  collection  by  local 
assessors,  and  collectors  and  boards  of  supervisors  in  counties  at 
present  in  force  was  first  adopted  by  chapter  133  of  the  Colonial 
Laws  of  1703,  and  has  since  so  existed  with  practically  no  modi- 
fication in  essential  particulars.  A  reform  of  the  principles  of 
our  system  was  directly  attempted  by  the  commissions  of  1861, 
1871  and  1881.  The  last  one  alone  succeeded  in  any  radical  inno- 
vation, though  leaving  undisturbed  the  general  rules  which  had  so 
long  prevailed,  but  succeeded  in  securing  the  adoption  of  the  prin- 
ciple now  in  such  successful  operation  for  the  levy  and  collection  of 
taxes  for  State  purposes  solely,  and  generally  referred  to  as  the 
Corporation  Tax  Law,  and  which  was  followed  by  the  Inheritance 
Tax  Law  of  1885,  having  the  same  end  in  view.  Contemporaneous 
with  our  own  labors,  the  State  has  had  the  benefit  of  those  of  Mr. 
Charles  A.  Collin  and  Mr.  J.  Newton  Fiero,  the  counsel  appointed 
by  Governor  Flower,  under  chapter  660  of  the  Laws  of  1892,  to 
examine  the  laws  of  this  and  other  States  relating  to  taxation, 
and  whose  report,  transmitted  to  you  on  February  3,  1893,  with 
the  accompanying  bill,  now  awaits  your  consideration. 

The  sessions  of  your  committee  were  publicly  held,  and  the 
testimony  taken  thereat  quite  fully  reported,  and  thoroughly  dis- 
cussed as  it  appeared  in  the  public  press  generally.  This  afforded 
to  all  parties  interested  ample  opportunity  to  follow  and  profit 
by  its  developments,  and  brought  about  a  full  exchange  of  criti- 
cisms and  suggestions,  and  leads  naturally  to  some  natural  com- 
mon conclusions.  With  most  of  the  views  advanced  in  the  coun- 
sel's report,  the  committee  in  the  main  agrees,  yet  directly  differs 
with  it  in  the  following  respects : 

First.  The  equalization  of  personal  taxes  between  the  counties 
as  proposed,  would  be  the  attempt  to  correct  an  inequality  which 
unquestionably  exists,  by  a  remedy  which  would  legalize  a  system 
of  official  guessing,  which  would  be  an  unworthy  act  of  legisla- 


6 

tion,  unbecoming  to  the  State,  and  only  intensifying  and  pro- 
longing a  conflict  between  its  several  local  divisions  which  it  is 
the  aim  of  this  report  to  do  away  with  wholly,  and  which  we 
believe  while  in  its  present  form  relating  to  real  property  alone 
has  been  and  will  continue  to  be  the  most  serious  obstacle  in  the 
way  of  genuine  tax  reform. 

Second.  The  taxation  of  mortgages,  as  treated  of  subsequently 
in  this  report,  we  believe  to  be  a  proper  change  from  the  present 
law  which  that  report  considers  but  does  not  affect. 

Third.  The  taxation  of  savings  bank  deposits  would  be  an 
undesirable  interference  with  the  earnings  and  savings  of  our 
thrifty  people. 

The  bill  submitted  by  the  counsel  in  the  procedure  which  it 
recommends  for  the  levy  and  collection  of  taxes,  and  their  review 
(with  some  changes  under  the  head  of  State  tax  sales),  and  for 
the  guidance  and  control  of  officials,  being  the  result  of  the  labors 
of  lawyers  of  great  experience,  and  the  special  knowledge  of 
Professor  Collin  through  his  valuable  service  as  a  member  of  the 
of  the  Statutory  Revision  Committee,  is  admirably  adapted  to 
eliminate  the  dissatisfaction  produced  by  the  antiquated  methods 
and  confusions  of  the  present  system. 

EQUALIZATION  OE  STATE  TAX. 

The  necessity  for  an  equalization  of  taxes  between  the  several 
counties  exists  wholly  by  reason  of  their  collection  of  their  share 
of  the  taxes  raised  to  meet  the  expenses  and  appropriations  of  the 
State.  It  has  always  been  confined  to  equalization  upon  real 
property.  Even  in  such  a  case  where  the  object  assessed  can  be 
seen,  its  results  are  never  satisfactory,  and  it  will  always  continue 
to  be  an  arbitrary  exercise  of  power,  and  not  a  pure  exercise  of 
judgment,  which  should  be  tolerated  only  until  constant,  well 
directed  effort  can  abrogate  the  necessity,  which  alone  justifies  it. 


This  method  of  raising  the  revenue  of  the  State  by',  local  taxation, 
not  so  much  by  the  burden  which  it  imposes,  but  by  the  excuse  which 
it  affords  the  local  assessors  for  reducing  assessments  upon  real, 
and  ignoring  the  existence  of  personal  property,  which  should  be 
taxed.  The  taxing  officers  who  come  nearest  to  a  compliance  with 
their  legal  duty  will  be  criticised  for  inviting  an  increase  of  the 
State  tax  upon  their  community.  In  fact,  in  the  judgment  of  your 
committee,  it  is  this  which  has  done  as  much  as  any  other  one  cause 
to  dull  the  public  conscience  into  a  toleration  of  the  wholesale 
and  manifest  evasion  of  taxation  upon  personal  property. 
Were  the  taxes  raised  by  each  county  disbursed  solely  for  the 
expenses  of  its  own  administration,  the  fixing  of  the  responsi- 
bility which  would  ensue,  could  not  fail  to  lead  to  and  develop 
economy.  The  public  generally,  does  not  stop  to  consider,  and 
an  extravagant  local  administration  will,  as  far  as  possible, 
conceal  from  them  the  small  share  of  State  expenses  at  present 
included  in  their  taxes.  The  average  levy  for  the  past  two 
years  for  State  purposes  is  about  one  and  seven-tenths  of  one 
per  cent  per  annum,  while  the  average  for  the  preceding  thirty 
years  was  nearly  three  times  as  great.  The  enlightened  under- 
standing of  the  principles  of  taxation,  which  our  examination 
leads  us  to  believe,  has  very  greatly  spread  during  the  past  few 
years  is  so  seriously  obstructed  in  its  attempts  to  arrive  at  any 
reform  of  those  principles  by  the  present  methods  of  collecting 
this  part  of  the  State's  revenue. 

In  view  of  all  these  facts  your  committee  was  impressed  at 
the  outset  with,  and  still  firmly  adheres  to,  the  opinion  that  the 
elementary  step  indispensable  to  develop  these  reforms,  was  to 
revise  means  whereby  the  revenues  of  the  State  should  be  raised 
independent  of  local  taxation,  and  which  we  believe  our  pro- 
posed amendments  to  the  existing  laws  will  in  a  short  time 
produce. 


8 

FINE  AND  IMPRISONMENT  FOB  NONPAYMENT  OF  TAXES. 
The  proceedings  for  contempt  provided  by  existing  statutes, 
as  a  remedy  for  the  enforcement  of  the  payment  oi  taxes,  is  of 
necessity  applied  to  cases  of  tax  upon  personal  property.  The 
fact  that  it  must  be  resorted  to  is  generally  the  most  satisfactory 
evidence  that  the  tax  should  never  have  been  levied.  It  arises 
only  as  a  remedy  against  those  individuals  who,  being  conscious 
that  they  have  no.  property  which  is  taxable,  and  relying  upon 
that,  neglect  to  examine  the  assessors'  books.  The  ordinary 
action  and  execution  will  afford  ample  relief,  and  in  harmony 
with  the  prevailing  sentiment,  we  have  provided  for  abolishing 
the  recourse  to  fine  and  imprisonment. 

TAXATION  OF   EXECUTORS. 

The  evasion  of  the  tax  upon  estates  held  in  trust  under  wills  is 
generally  complained  of.  Where  there  is  more  than  one,  the 
changing  of  the  possession  from  one  county  to  another  or  to 
another  State,  following  the  residence  of  the  executors  or  trus- 
tees, will  hereafter  be  obviated  by  a  bill  which  we  report,  fixing 
the  county  of  probate  as  the  localit}7  where  the  tax  shall  be  levied. 
This  measure  will  afford  considerable  relief,  it  is  believed,  to  the 
counties  of  New  York  and  Kings. 

POWERS  AND  DUTIES  OF   ASSESSORS. 

The  powers  of  the  assessors  to  examine  complaints  should  be 
enlarged  so  as  to  permit  of  the  examination  of  any  persons  and 
papers  which  to  them  may  appear  pertinent  to  the  inquiry.  At 
present  this  is  practically  limited  to  such  evidence  as  the  com- 
plainant may  offer,  and  the  power  to  compel  the  production  of 
papers  and  persons  is  not  vested  in  the  assessors.  We  believe 
that  the  necessary  amendment  is  provided  by  a  bill  which  we 
submit,  and  wherein  provision  is  also  made  for  more  extensive 
powers  over  the  reopening  and  revision  of  lists  where  persons  or 


9 

property  are  omitted.  The  payment  of  assessors  has  been 
frequently  urged  upon  the  committee  as  in  part  the  cause  why 
more  thorough  examinations  are  not  made  by  them.  We,  there- 
fore, recommend  that  their  actual  and  necessary  disbursements 
should  be  audited  and  allowed  to  them.  Upon  the  other  hand, 
recognizing  that  the  assessor  is  intrusted  with  duties  whose 
evasion  work  incalculable  wrong,  we  believe  that  the  added 
penalty  which  we  provide  for  misconduct,  whereby  he  is  dis- 
qualified forever  from  holding  office,  will  have  a  proper 
restraining  effect. 

AGRICULTURAL  INTERESTS. 

It  needed  no  special  examination  to  impress  upon  our  members 
that  the  value  of  farming  lands  had  generally  suffered  a  severe 
decline  during  the  past  decade  and  that  at  their  present  depreciated 
prices  they  have  found  but  little  market.  The  testimony  taken 
showed  this  to  be  very  nearly  a  universal  rule.  It  can  not  be 
said,  however,  that  the  question  of  taxation  has  played  any 
important  part  as  a  factor  in  producing  this  undesirable  condi- 
tion, and,  clearly,  the  State  tax  has  been  so  light  that  it  may  be 
said  to  have  had  positively  no  bearing.  This  being  the  case, 
whatever  injustice  they  have  suffered  in  regard  to  taxation  must  be 
said  to  arise  from  lax  and  extravagant  administration  of  the  laws 
in  their  several  localities,  and  for  which  they  themselves  should 
be  primarily  held  liable.  It  is  hardly  to  be  expected  that  the 
field  of  general  taxation,  judging  from  the  tendency  of  public 
opinion  of  to-day,  will  in  this  State  be  extended.  After  reaping 
such  benefits  as  we  trust  will  follow  from  the  tax  reforms  which 
it  is  to  be  hoped  this  Legislature  will  adopt,  the  relief  must  be 
sought  in  other  channels  than  tax  legislation.  It  is  undoubtedly 
true  that  the  expenses  of  local  government  are  chiefly  chargeable 
to  the  city  and  to  the  village  rather  than  to  oar  scattered  commu- 
nities. It  would  be  proper  in  view  of  this  to  allot  the  respective 
2 


10 

shares  of  such  burden  upon  a  different  basis  than  at  present 
used.  Some  table  by  which  a  city  and  village  should  pay  110 
per  cent  on  their  assessed  valuation,  and  thereby  reduce  that  of 
the  remainder  to  90  per  cent,  would  make  a  due  allowance  for 
the  sources  of  the  expense  and  benefits  received.  In  this  connec- 
tion it  will  be  proper  to  report  upon  these  topics  which  find 
their  chief  if  not  sole  advocates  outside  of  the  centers  of  popula- 
tion in  our  State.  These  are  the  listing  system,  the  income 
tax,  the  exemption  of  personal  property  by  offset  for  debt,  the 
rate  of  interest,  and  the  taxation  of  mortgage  indebtedness. 


THE  LISTING  SYSTEM. 

The  representative  farmers  who  appeared  before  us  were  them- 
selves considerably  divided  in  opinion  as  to  the  advisability  of,  or 
probable  success  from  its  adoption.  The  reports  from  those 
States  where  it  has  been  in  operation  do  not  show  a  healthy 
increase  in  property  or  values  of  the  subjects  listed.  This  State 
cannot  well  afford,  therefore,  to  experiment  with  the  subject,  but 
can  wisely  and  well  afford  to  await  a  full  and  fair  trial  by  those 
States  which  have  ventured  in  this  direction,  with  the  certainty 
that  the  intelligence  and  independence  of  our  citizens  will  cheer- 
fully profit  by  the  result  when  time  and  experience  has  demon- 
strated that  the  results  to  be  expected  are  not  problematical. 

THE  INCOME  TAX. 

This  is  justly  regarded  as  one  of  the  fairest  means  of  raising 
public  revenue.  It  is,  however,  we  believe,  regarded  by  the  great 
majority  of  our  people  as  a  last  resort,  a  kind  of  war  measure. 
In  a  State  whose  wealth  is  distributed  as  ours  is,  and  where  the 
extreme  contrasts  of  great  wealth  and  poverty,  of  comfort  and 
privation  do  not  exist,  and  the  absence  of  which  conditions  pre- 
vents the  striking  contrasts  which  justify  and  render  it  necessary 
in  European  countries,  it  would  lack  the  moral  support  of  the 


11 

people,  and  would  only  re-enact,  in  another  form,  the  inequalities 
which  to-day  follow  the  efforts  to  enforce  our  laws  for  taxing 
personal  property. 

DEDUCTIONS  FOR  PERSONAL  DEBTS. 

Each  instance  where  an  unlawful  advantage  of  this  provision  of 
our  laws  is  gained  is  discussed  until  the  evil  is  multiplied  far 
beyond  what,  in  our  judgment,  really  exists. 

The  principal  property  owners  who  would  be  affected  by 
a  repeal  of  this  provision  are  those  whose  effects  are  in  sight,  our 
farmers,  mechanics  and  manufactures.  It  is  the  only  means 
whereby  they  equalize  in  a  small  degree  the  extra  burden  which 
they  bear  for  the  owners  of  personal  property,  whose  property  is 
not  visible  to  the  assessors.  The  creation  of  fictitious  debts  by 
this  latter  class,  will,  it  is  confidently  expected,  be  overcome  by 
the  provisions  of  the  Deyo  act  of  1892.  To  refuse  this  concession 
to  the  people  of  a  commercial  State  such  as  ours,  would  be  a 
virtual  attempt  to  ignore  the  system  of  credits  upon  which  its 
commercial  prosperity  is  based,  and  as  a  direct  sequence  fasten 
upon  every  consumer  an  increased  cost  for  the  necessaries  of  life. 

THE  RATE  OF  INTEREST. 

As  upon  the  question  of  the  listing  system  a  wider  difference 
of  opinion  was  found  among  farmers  than  we  had  been  led  to 
expect  by  the  advocates  of  a  reduction  of  the  present  rate  of  six 
percent.  Borrowers  among  commercial  people  were  generally 
opposed  to  it  upon  intelligent  reasoning.  It  can  not  be  said  that 
such  an  enactment  is  seriously  demanded  by  any  interest.  In  the 
belief,  however,  that  the  law  of  supply  and  demand  which  must 
control  this  matter  largely  will  lead  thereby  to  the  voluntary 
reduction  in  most  instances,  we  have  recommended  the  exemption 
of  mortgages  from  all  taxation  except  a  specific  State  tax  of  one- 
half  of  one  per  cent. 


12 


TAXATION  or  MORTGAGES. 

Money  can  not  lay  idle,  and  the  borrowers  who  have  goo 
security  will  find  many  lenders.  This  is  evidenced  in  the  pre- 
vailing fact  that  loans  of  this  character  are  now  frequently  made 
considerably  below  the  fixed  legal  rate.  Where  the  security  is 
not  fitted  to  find  help  in  this  market  the  borrower  must  seek  it 
where  the  lender  will  exact  all  the  law  allows.  More  he  can  not 
safely  do. 

The  plan  that  is  proposed  by  your  committee  of  taxing  mort- 
gages for  State  purposes  is  deemed  to  be  the  wisest  course.  Its 
success  may  demonstrate  that  the  claim  that  the  exemption  of  all 
personal  property  from  general  taxation  would  be  a  positi 
public  benefit  is  well  founded. 

LOCAL  OPTION. 

Local  option  means  absolutely  the  exemption  of  personal  prop- 
erty from  taxation.  We  accept  the  judgment  of  the  representa- 
tive men  of  New  York  who  testified  before  us  to  that  opinion. 
We  believe  their  prediction  that,  once  adopted  in  New  York  city 
and  county,  it  would  compel  adjoining  counties,  one  by  one,  to 
follow  its  example,  in  self-protection,  if  not  from  choice.  Where 
would  those  be  who  would  be  tardy  in  joining  the  movement, 
and  if  they  were  tardy  in  doing  so,  what  would  be  their  condi- 
tion ?  They  would  be  stripped  of  the  resident  population  which 
possessed  wealth.  From  this  deplorable  condition  how  long 
would  it  require  for  them  to  regain  it  ?  It  is  doubtful  if  they 
ever  could.  Sufficient  other  causes  are  already  in  operation, 
depleting  the  population  of  many  of  our  counties.  If  it  be 
wise  policy  to  exempt  personal  property,  the  Legislature  shoul 
face  the  issue  fairly,  and  not  by  indirection.  All  counties  should 
be  given  a  fair  start  in  its  advantages  if  it  really  possesses 
them. 


/ 

f  UNIVERSITY 

13  ^£i,£       .^ 

Is  CAPITAL  DRIVEN  FROM  THE  STATE  ? 

The  formation  of  corporations  in  adjoining  States,  and  in  some 
quite  distant,  in  which  the  moving  spirits  are  citizens  of  New 
York,  and  the  substantial  capital  is  their  contribution,  is  not  due, 
primarily,  to  our  tax  laws.  The  provisions  of  our  statutes  whereby 
personal  liability  may  follow  stockholders,  and  corporations  are 
required  to  furnish  full  reports  is  the  essential  grievance.  Those 
requirements  are  in  conformity  with  the  well  settled  policy  of  this 
State.  They  simply  carry  out  a  virtual  requirement  of  our  Con- 
stitution, which  provides  (Article  YIII,  section  12),  "Dues  from 
corporations  shall  be  secured  by  such  individual  liability  of  the 
corporators,  and  other  means  as  may  be  prescribed  by  law." 
These  provisions  of  our  corporation  laws  have  given  to  those 
bodies  an  enviable  reputation  for  stability  which  it  would  be 
unwise  to  destroy.  The  tax  collected  is  but  an  incident  in  the 
history  of  this  flight  of  capital,  if  we  are  to  believe  the  uniform 
testimony  produced  before  us.  These  emigrants  return  to  New 
York  to  transact  their  business.  If  they  desire  to  publish  them- 
selves as  avoiding  liability  under  our  laws  the  loss  is  their  own. 
The  loss  as  a  source  of  taxation  can  be  remedied  by  applying  to 
them  the  same  laws  which  tax  our  domestic  corporations,  and 
the  amendment  which  we  submit  allows  them  no  advantage,  nor 
does  it  discrimate  against  them,  but  simply  provides  that  such 
business  can  not  be  carried  on  here  unless  the  tax  shall  first  be 
paid,  both  for  original  entry,  and  annually  thereafter.  A  State 
tax  is  also  recommended  upon  corporations  now  exempt,  where 
the  net  earnings  exceed  six  per  cent. 

INCREASING  THE  REVENUES  OF  THE  STATE. 
The  report  of  Comptroller  Campbell,  submitted  this  year,  esti- 
mates the  probable  expenditures  to  be  provided  for  by  State  tax 
for  the  current  fiscal  year,  $7,784,848.16. 


14 

To  impose  taxes  which  would  at  once  raise  so  large  a  sum 
through  new  channels  or  different  methods  would  bean  innovation 
too  startling  to  command  success.  A  gradual,  sure,  but  by  no  means 
slow  method  which  can  attain  this  desirable  end  will  commend 
itself  to  the  people  and  their  representatives.  The  sum  at  present 
raised  by  general  tax  for  State  purposes  from  fixed  causes- must 
continue  to  decline.  The  extinguishment  of  the  State  debt, 
decreased  deficiencies  of  the  State  prisons,  conclusion  of  the 
Chicago  exposition,  completion  of  the  Capitol,  and  other  causes 
promise  a  speedy  retrenchment  in  the  amount  so  necessary  to  be 
raised.  In  the  meantime  the  additions  from  the  more  efficient 
administration  and  natural  increase  under  the  laws,  and  the 
development  of  those  proposed  for  State  revenue  will  speedily 
climb  to  a  point  where  they  will  meet  and  pass  the  demands  upon 
the  State.  The  first  increase  is  recommended  to  be  raised  by  a 
tax  for  State  purposes  upon  mortgages. 

TAXING  MORTGAGES. 

As  personal  property  mortgages  are  now  taxable,  and  presum- 
ably are  contributing  the  share  thus  specifically  imposed  upon 
them,  but  in  reality  are  not.  The  tax  proposed  is  about  the 
general  average  which  they  have  been  so  subject  to  for  the  past 
thirty  years.  The  additional  burden  is  that  no  deduction  for 
debt  is  allowed  as  against  the  tax  for  State  purposes.  It  is  not 
a  violent  assumption  to  assert  that  the  holders  of  mortgages 
have  at  least  that  amount  of  net  assets  which  are,  therefore, 
rightfully  taxable.  To  the  general  investor  in  mortgages  this 
change  presents  an  opportunity  for  the  exemption  from  all  other 
taxes,  and  it  is  believed  will  lead  to  a  general  reduction  in  t 
rate  of  interest  upon  those  securities  by  increasing  their  availa 
bility  as  an  investment  by  insuring  a  large  margin  of  net  profit* 
than  many  public  securities  now  pay. 

As  a  tax  upon  personal  property  it  is  an  ideal  one.     It  defies 
evasion,  and  must  be  paid  in  every  instance  when  the  mortgage 


lis 
ler 


15 

is  taken  as  security.  The  chief  argument  against  taxing  personal 
property  is  that  it  can  not  be  universally,  that  is,  equitably 
enforced.  The  system  proposed  completely  obviates  this  objec- 
tion. Of  the  results  to  be  anticipated  from  this  source  of  revenue 
a  few  figures  will  give  demonstrations.  The  present  assessed 
equalized  value  of  real  property  in  this  State  is  $3,526,645,815. 
The  State  Assessors  say  that  this  is  but  sixty-five  per  cent  of  the 
actual  value,  which  should  be,  therefore,  in  round  numbers, 
$5,400,000,000,  which  is,  probably,  still  a  low  estimate.  If  forty 
per  cent  of  this  is  mortgaged  for  fifty  per  cent  of  its  value,  there 
would  be  in  mortgages  about  $1,000,000,000.  This  is  exclusive 
of  mortgages  on  personal  property.  A  tax  of  one-half  of  one  per 
cent  on  that  amount  would  produce  $5,000,000,  but  which  will  be 
reduced  by  the  securities  held  by  savings  banks  and  nontaxable 

institutions. 

SUCCESSION  TAX. 

The  conclusions  arrived  at  by  the  committee  are  to  favor  the 
incorporation  into  the  present  law  of  a  progressive  or  graded  tax ; 
to  include  real  estate  in  estates  of  over  $50,000,  in  the  direct  line ; 
and  to  abolish  exemptions  on  all  amounts  over  $10,000.  When 
it  is  recalled  that  the  increase  of  receipts  from  the  succession  tax 
last  year  over  the  previous  one  was  $895,950.93,  it  would  seem 
safe  to  expect  a  still  larger  increase  from  the  proposed 

amendments. 

CORPORATION  TAX. 

The  practice  of  incorporating  under  the  laws  of  other  States 
has  already  been  referred  to.  'Amendments  are  reported  to  the 
existing  organization  and  franchise  tax  which  is  collected  from 
domestic  corporations,  which  protect  our  own  corporations  by 
compelling  foreign  corporations  doing  business  in  this  State  to 
contribute  equally  with  them. 

Evasions  of  this  tax  by  domestic  corporations  which  being 
heavily  bonded  pay  no  dividend  and  are,  therefore,  not  propor- 
tionately assessed  upon  the  basis  of  the  market  value  of  their 


16 

stock,  are  overcome  by  an  amendment  which  provides  that  the 
capital  stock  shall  in  such  cases  be  assessed  at  its  par  value. 
From  those  changes  in  the  corporation  tax  a  handsome  income 
can  also  be  reasonably  estimated. 


CONCLUSION. 

Your  committee  concludes  that  the  direct  revenues  of  the 
State  will,  if  their  suggestions  are  enacted  by  you  and  meet  with 
the  executive  sanction,  start  with  an  annual  increase  in  the 
State  revenues  of  over  $4,000,000.  They  believe  it  will  solve 
the  question  of  taxes  for  State  purposes  and  open  the  way  for 
intelligent  reform  upon  the  vital  topics  of  taxation  for  local 
purposes.  We  confess  a  considerable  change  of  heart  from  the 
opinions  at  first  entertained  by  us  when  we  say  that  the  propo- 
sition to  relieve  personal  property  from  taxation  presents  a 
problem  which  we  are  well  satisfied  is  worthy  of  careful  study, 
but  to  which  we  do  not  feel  fully  warranted  in  giving  our  present 
assent  further  than  in  the  direction  recommended. 

CHAS.  P.  MCCLELLAND. 
JOHN  F.  AHEARN. 
H.  J.  COGGESHALL. 
THOMAS  F.  BYRNES. 
HENRY  H.  GUENTHER. 
JOHN  J.  CASSIN. 
GEO.  R.  MALBY. 

Dated  ALBANY,  Mcwch  17,  1893. 


APPENDIX 


AN  ACT  to  amend  chapter  four  hundred  and 
eighty-three  of  the  laws  of  eighteen  hundred  and 
eighty-five,  entitled  "An  act  to  tax  gifts, 
legacies,  and  collateral  inheritances  in  certain 
cases,"  and  the  several  acts  amendatory  thereof. 

The  People  of  the  State  of  New  York,  represented  in  Senate 
and  Assembly,  do  enact  as  follows: 

Section  1.  Section  one  of  chapter  four  hundred  and  eighty-three 
of  the  laws  of  eighteen  hundred  and  eighty-five,  as  amended  by 
chapter  seven  hundred  and  thirteen  of  the  laws  of  eighteen  hun- 
dred and  eighty-seven,  and  by  chapter  two  hundred  and  fifteen 
of  the  laws  of  eighteen  hundred  and  ninety-one,  and  as  further 
amended  by  chapter  one  hundred  and  sixty-nine  of  the  laws  of 
eighteen  hundred  and  ninety-two,  is  hereby  amended  so  as  to  read 
as  follows: 

§  1.  After  the  passage  of  this  act,  all  property  which  shall  pass 
by  will  or  by  the  intestate  laws  of  this  state  from  any  person  who 
may  die  seized  or  possessed  of  the  same  while  a  resident  of  this 
state;  or,  if  the  decedent  was  not  a  resident  of  this  state  at  the 
time  of  his  death,  which  property,  or  any  part  thereof,  shall  be 
within  this  state;  or  any  interest  therein,  or  income  therefrom, 
which  shall  be  transferred  by  deed,  grant,  sale  or  gift  made  in 
contemplation  of  the  death  of  the  grantor  or  bargainer,  or  intended 
to  take  effect  in  possession  or  enjoyment  after  such  death,  or 
whether  bequeathed  or  devised  to  representatives  in  lieu  of 
commissions  upon  the  value  of  such  property  over  and  above  the 
commissions  allowed  by  law  to  any  person  or  persons,  or  to  any 
body,  politic  or  corporate,  in  trust  or  otherwise,  or  by  reason 
whereof  any  person  or  body  politic  or  corporate  shall  become 
beneficially  entitled  in  possession  or  expectancy  to  any  property 
or  the  income  thereof,  shall  be  and  is  subject  to  a  tax  at  the  rate 
3 


18 

hereinafter  specified,  to  be  paid  to  the  treasurer  of  the  proper 
county,  and  in  the  county  of  New  York  to  the  comptroller  thereof, 
for  the  use  of  the  state;  and  all  heirs,  legatees,  devisees,  adminis- 
trators, executors  and  trustees  shall  be  liable  for  any  and  all  such 
taxes  until  the  same  shall  have  been  paid  as  hereinafter  directed. 
When  the  beneficial  interest  to  any  personal  property  or  income 
therefrom  shall  pass  to  or  for  the  use  of  any  father,  mother, 
husband,  wife,  child,  brother,  sister,  wife  or  widow  of  a  son,  or  the 
husband  of  a  daughter,  or  any  child  or  children  adopted  as  such 
in  conformity  with  the  laws  of  the  state  of  New  York,  or  to  any 
person  to  whom  the  deceased,  for  not  less  than  ten  years  prior  to 
death,  stood  in  the  mutually  acknowledged  relation  of  a  parent, 
or  to  any  lineal  descendant  born  in  lawful  wedlock;  in  every  such 
case  the  rate  of  such  tax  shall  be  one  dollar  on  every  hundred 
dollars  of  the  clear  market  value  of  such  property,  so  passed,  up 
to  the  amount  of  one  hundred  thousand  dollars,  and  on  all  sums 
beyond  said  one  hundred  thousand  dollars,  and  up  to  the  amount 
of  five  hundred  thousand  dollars,  such  tax  shall  be  two  dollars  on 
every  hundred  dollars  of  the  clear  market  value  of  such  property, 
and  on  all  sums  beyond  said  five  hundred  thousand  dollars,  said 
tax  shall  be  two  dollars  and  fifty  cents  on  every  hundred  dollars 
of  the  clear  market  value  of  such  property,  provided  that  an  estate 
which  may  be  valued  at  a  less  sum  than  ten  thousand  dollars,  shall 
not  be  subject  to  any  such  duty  or  tax.  When  the  beneficial 
interest  in  any  real  property  or  any  income  therefrom  shall  pass 
to  or  for  the  use  of  any  father,  mother,  husband,  wife,  child, 
brother,  sister,  wife  or  widow  of  a  son,  or  the  husband  of  a  'laugh- 
ter, or  any  child  or  children  adopted  as  such  in  conformity  with 
the  laws  of  the  state  of  New  York,  or  to  any  person  to  whom  the 
deceased,  for  not  less  than  ten  years  prior  to  death,  stood  in  the 
mutually  acknowledged  relation  of  a  parent,  or  to  any  lineal 
descendant  born  in  lawful  wedlock;  in  every  such  case  the  rate  of 
such  tax  shall  be  one  dollar  on  every  hundred  dollars  of  the  clear 
market  value  of  such  property,  provided  that  an  estate  which 
may  be  valued  at  a  less  sum  than  fifty  thousand  dollars  shall  not 
be  subject  to  any  such  duty  or  tax.  In  all  other  cases  the  rate 
shall  be  five  dollars  on  each  and  every  hundred  dollars  of  the 
clear  market  value  of  all  property,  real  and  personal,  and  at  and 


19 

after  the  same  rate  for  any  less  amount,  provided  that  an  estate 
which  may  be  valued  at  a  less  sum  than  five  hundred  dollars  shall 
not  be  subject  to  any  such  duty  or  tax;  and  provided  further 
that  any  property  hereafter  devised  or  bequeathed  to  any  religious 
corporation  to  an  amount  not  to  exceed  ten  thousand  dollars  shall 
be  exempted  from  and  not  to  be  subject  to  the  provisions  of  this 
act 

§  2.  This  act  shall  take  effect  immediately. 

AN  ACT  to  abolish  fine  and  imprisonment  for  non- 
payment of  taxes. 

The  People  of  the  State  of  New  York,  represented  in  /Senate 
and  Assembly ,  do  enact  as  follows ; 

Section  1.  After  the  passage  of  this  act,  a  neglect  or  refusal 
to  pay  any  tax,  shall  not  be  punishable  as  a  contempt,  and  fine 
and  imprisonment  for  any  such  nonpayment  is  hereby  abolished. 

§  2.  This  act  shall  take  effect  immediately. 


AN  ACT  to  amend  chapter  five  hundred  and  forty- 
two  of  the  laws  of  eighteen  hundred  and  eighty, 
entitled  "  An  act  to  provide  for  raising  taxes  for 
the  use  of  the  state,  upon  certain  corporations, 
joint-stock  companies,  and  associations,"  and  the 
several  acts  amendatory  thereof. 

The  People  of  the  State  of  New  York,  represented  in  Senate 
and  Assembly,  do  enact  as  follows  : 

Section  1.  Section  three  of  chapter  five  hundred  and  forty-two 
of  the  laws  of  eighteen  hundred  and  eighty,  entitled  "An  act  to 
provide  for  raising  taxes  for  the  use  of  the  state  upon  certain  cor- 
porations, joint-stock  companies,  and  associations,  as  amended  by 
chapter  three  hundred  and  sixty-one  of  the  laws  of  eigjhteen  hun- 
dred and  eighty-one,  and  chapter  three  hundred  and  fifty-nine  of 
the  laws  of  eighteen  hundred  and  eighty-five,  and  chapter  one 
hundred  and  ninety-three  of  the  laws  of  eighteen  hundred  and 
eighty-nine,  and  chapter  three  hundred  and  fifty-three  of  the  laws 
of  eighteen  hundred  and  eighty-nine,  and  chapter  five  hundred  and 


twenty-two  of  the  laws  of  eighteen  hundred  and  ninety,  is  hereby 
further  amended  so  as  to  read  as  follows: 

§  3.  Every  corporation,  joint-stock  company,  or  association,  or 
express  company,  whatever,  now  or  hereafter  incorporated,  organ- 
ized or  formed  under,  by,  or  pursuant  to  law  of  this  state,  except 
only  savings  banks  and  institutions  for  savings,  life  insurance 
companies,  banks,  foreign  insurance  companies,  and  agricultural 
and  horticultural  societies,  associations  or  corporations,  which 
exceptions,  however,  shall  not  include  gas  companies,  trust  com- 
panies, electric  and  steam  heating,  lighting  and  power  companies, 
shall  be  liable  to  and  shall  pay  a  tax,  as  a  tax  upon  its  franchise 
or  business,  into  the  state  treasury  annually,  to  be  computed  as 
follows:  If  the  dividend  or  dividends  made  or  declared  by  such 
corporation,  joint-stock  company  or  association,  or  express  com- 
pany during  any  year  ending,  with  the  first  day  of  November, 
amount  to  six  or  more  than  six  per  centum  upon  the  par  value  of 
its  capital  stock,  then  the  tax  to  be  at  the  rate  of  one-quarter  mill 
upon  the  capital  stock  for  each  one  per  centum  of  dividends  so 
made  or  declared;  or  if  no  dividend  be  made  or  declared,  or  if  the 
dividend  or  dividends  made  or  declared  do  not  amount  to  six  per 
centum  upon  the  par  value  of  said  capital  stock,  then  the  tax  to 
be  at  the  rate  of  one  and  one-half  mills  upon  each  dollar  of  the 
said  capital  stock,  at  its  par  value;  and  in  case  any  such  corpora- 
tion, joint-stock  company  or  association  or  express  company  shall 
have  more  than  one  kind  of  capital  stock,  as  for  instance,  common 
and  preferred  stock,  and  upon  one  of  said  stocks  a  dividend  or 
dividends,  amounting  to  six  or  more  than  six  per  centum  upon 
the  par  value  thereof,  has  b~en  made  or  declared,  and  upon  the 
other  no  dividend  has  been  made  or  declared,  or  the  dividend  or 
dividends  made  or  declared  thereon  amount  to  less  than  six  per 
centum  upon  the  par  value  thereof,  then  the  tax  shall  be  at  the 
rate  of  one-quarter  mill  for  each  one  per  centum  of  dividem 
made  or  declared  upon  the  capital  stock  upon  the  par  value 
which  the  dividend  or  dividends  made  or  declared  amount  to  six 
or  more  than  six  per  centum,  and  in  addition  thereto  tax  shall  be 
charged  at  the  rate  of  one  and  one-half  mills  upon  each  dollar  of 
capital  stock  at  par  value,  upon  which  no  dividend  was  made  or 


21 

declared,  or  upon  the  par  value  of  which  the  dividend  or  dividends 
made  or  declared  did  not  amount  to  six  per  centum.  Domestic 
manufacturing  or  mining  corporations,  or  companies  wholly 
engaged  in  carrying  on  manufacture,  or  mining  ores  within  this 
state,  shall  not  be  taxable  as  herein  provided,  unless  the  net 
earnings  thereof  shall  exceed  six  per  centum  per  annum.  Any 
foreign  corporation  doing  business  in  this  state  shall  annually  pay 
a  like  tax  as  an  excise  tax  or  license  fee,  to  be  computed  as 
follows,  viz.  :  Upon  that  percentage  of  its  total  capital  stock, 
which  the  business  of  said  corporation  done  in  this  state  bears 
to  its  entire  business.  Upon  the  annual  payment  thereof  the 
state  treasurer  shall  deliver  to  such  foreign  corporation  a  certifi- 
cate of  such  payment^  and  no  action  shall  be  maintained,  or  recov- 
ery had,  in  any  of  the  courts  of  this  state,  by  such  foreign  corpora- 
tion doing  business  in  this  state  without  such  annual  certificate. 
§  2.  This  act  shall  take  effect  immediately. 


AN   ACT   to   provide   for   licensing   foreign   stock 

corporations. 

The  People  of  the  State  of  New  York,  represented  in  Senate 
and  Assembly,  do  enact  as  follows  : 

Section  1.  Every  foreign  corporation  doing  business  in  this  state 
shall  pay  a  tax  of  one-eighth  of  one  per  cent  upon  that  percentage 
of  its  total  capital  stock  which  the  business  of  said  corporation 
done  in  this  state  bears  to  its  entire  business,  to  the  state  treas- 
urer, for  the  use  of  the  state,  upon  obtaining  a  certificate  of 
authority  from  the  secretary  of  state  to  do  business  in  this 
state;  and,  if  subsequent  to  the  obtaining  of  such  authority,  it 
should  increase  its  capital,  it  shall  pay  a  like  tax  upon  such 
increase.  The  amount  of  capital  on  which  such  tax  shall  be  paid 
shall  be  fixed  by  the  comptroller  in  the  same  manner  as  he  fixes 
the  tax  to  be  paid  by  a  corporation  for  exercising  a  corporate  fran- 
chise. No  action  shall  be  maintained,  or  recovery  had,  in  any  of 
the  courts  of  this  state  by  such  foreign  corporation  doing  business 
in  this  state,  without  obtaining  such  certificate  of  authority  and  a 
receipt  for  the  license  fee  hereby  imposed. 

§  2.  This  act  shall  take  effect  immediatelv. 


22 

AN  ACT  in  relation  to  the  assessment  and  collecti< 

of  taxes. 


The  People  of  the  State  of  New    York,  represented   >n 
and  Assembly,  do  enact  as  follows  : 

Section  1.  Whenever  a  person  on  his  own  behalf,  or  on  behalf 
of  others,  shall  apply  to  any  assessor,  or  board  or  body,  charged 
with  the  levying  of  assessments  or  taxes,  to  reduce  the  value  of 
any  real  or  personal  estate,  as  set  down  on  the  assessment-roll, 
it  shall  be  the  duty  of  such  assessor,  board  or  body,  to  examine 
such  person  under  oath,  touching  the  value  of  the  said  real  or 
personal  estate,  and  they  shall  have  power  to  administer  the 
necessary  oath  therefor,  and  to  issue  to  any  and  all  persons,  sub- 
poenas duces  teciun,  to  appear  before  and  submit  to  examination 
upon  such  application,  and  after  such  examination,  and  such 
other  supplementary  evidence  under  oath  as  shall  have  been 
received,  they  shall  fix  the  value  thereof;  but  if  such  person  so 
applying,  or  the  party  to  whom  such  application  is  made  shall 
refuse  to  answer  any  question  as  to  the  value  of  such  real  or 
personal  estate,  or  the  amount  thereof,  or  shall  fail  to  present 
sufficient  supplementary  evidence,  under  oath,  to  justify  the 
reduction,  the  said  assessors  shall  not  reduce  the  value  of  such 
real  or  personal  estate.  The  examination  so  taken  shall  be  writr 
ten,  be  subscribed  by  the  persons  examined,  severally,  and  shall 
be  filed  in  the  office  of  said  assessors,  board  or  body;  and  any 
person  who  may  willfully  swear  false  on  such  examination,  shall 
be  deemed  guilty  of  willful  and  corrupt  perjury. 

§  2.  Whenever  it  shall  be  made  to  appear  to  the  assessors,  or 
any  board  or  body,  charged  with  levying  any  tax,  that  any  body 
or  person  lawfully  taxable  shall  have  been  omitted  from  the 
assessment-roll  for  the  current  or  preceding  year,  it  shall  be  their 
duty  to  enter  the  same  in  the  assessment-roll  of  the  current 
year  at  any  time  within  five  days  previous  to  the  final  day  foi 
inspection  of  said  assessment-roll,  and  shall  forthwith  cause 
notice  of  such  addition  or  change  to  be  mailed  to  the  person  or 
persons  affected  thereby,  at  his  last  known  place  of  residence. 

§  3.  In  addition  to  the  compensation  now  fixed  by  law,  every 
town  assessor  shall  be  entitled  to  be  reimbursed  for  necessary 


23 

and  lawful  expenses  while  engaged  in  the  performance  of  his 
duties,  to  be  audited  and  allowed  by  the  board  of  town  auditors. 

§  4.  Every  omission  of  duty  by  any  assessor  shall  be  a  mis- 
demeanor, and  upon  conviction  shall  disqualify  the  person  so 
convicted  thereafter  from  holding  any  public  office  or  employ- 
ment. 

§  5.  The  place  wherein  the  testator  last  resided  in  any  county 
in  which  the  will  is  probated,  shall  be  the  place  where  all  taxes 
shall  be  levied,  and  paid  on  any  property  held  under  the  terms 
of  said  will. 

§  6.  This  act  shall  take  effect  immediately. 

AN  ACT  to  regulate  the  taxation  of  mortgages. 

77i<?  People  of  tie  State  of  New  York,  represented  in  Senate 
and  Assembly,  do  enact  as  follows: 

Section  1.  A  tax  is  imposed  upon  every  mortgage  now  taxable 
in  any  form,  for  any  term  on  any  real  property,  or  of  any  interest 
therein,  of  the  value  of  two  hundred  dollars  or  over,  at  the  rate 
of  one-half  of  one  per  cent  upon  the  amount  paid  thereon, 
to  be  paid  annually  as  herein  provided,  for  the  use  of  the  state. 

§  2.  Such  tax  shall  be  paid  by  the  holder  of  such  mortgage 
as  herein  provided,  and  no  such  mortgage  shall  hereafter  be 
recorded  or  filed,  or  received  for  recording  or  filing,  in  any  public 
office  as  by  law  provided,  unless  the  party  producing  the  same 
therefor  shall  deliver  with  such  mortgage  a  receipt  of  the  county 
treasurer  of  such  county,  except  in  the  county  of  New  York,  where 
such  receipt  shall  be  that  of  the  comptroller  of  the  city  of  New 
York,  and  from  which  receipt  it  shall  appear  that  there  has  been 
paid  to  such  receipting  officer  the  said  tax  imposed  by  this  act 
from  the  date  thereof,  and  for  the  period  of  at  least  one  year. 
The  said  tax  shall  be  paid  annually  thereafter  in  the  same  man- 
ner, except  in  case  of  foreclosure  or  sale  thereunder  or  satis- 
faction thereof  when  the  tax  proportioned  for  the  part  of  the 
year  shall  be  received. 

§  3.  Said  tax  shall  be  and  constitute  a  lien  on  every  such  mort- 
gage, and  upon  the  property  covered  thereby,  and  which  lien  and 
the  said  tax  shall  be  paid  and  discharged  solely  by  the  holder 
of  such  mortgage,  and  any  agreement  whereby  the  same  is  to  be 


24 


or  shall  have  been  paid  by  any  person  other  than  the  holder 
of  said  mortgage,  directly  or  indirectly,  shall  be  void,  and  any 
such  tax  or  lien  so  paid  by  any  person  other  than  the  holder  of 
said  mortgage,  directly  or  indirectly,  shall  be  a  valid  set-off  and 
counterclaim  against  the  interest  or  principal  due  or  to  become 
due  upon  such  mortgage,  in  favor  of  the  mortgagor  or  his 
successors. 

§  4.  Every  mortgage  filed  or  recorded  on  or  prior  to  the  passage 
of  this  act  shall  pay  the  tax  herein  levied  within  thirty  days  of 
such  date  of  passage,  and  annually  thereafter. 

§  5.  All  taxes  imposed  by  this  act  shall  be  paid  to  the  county 
treasurer  of  the  county  wherein  any  such  mortgage  is  filed  or 
recorded,  except  the  county  of  New  York,  where  the  same  shall 
be  paid  to  the  comptroller  of  the  city  of  New  York,  and  such 
officer  shall  deliver  duplicate  receipts  therefor  specifying  the 
date  and  tune  of  payment  and  which  shall  fix  and  determine  the 
priority  of  the  lien  thereof.  When  any  default  shall  be  made 
in  the  payment  of  the  tax  hereby  imposed,  interest  at  the  rate 
of  fifteen  per  cent  per  annum  shall  be  charged  and  collected 
upon  the  amount  of  said  tax  so  due  while  unpaid. 

§  6.  No  judgment  of  foreclosure  upon  any  mortgage  shall  be 
entered,  nor  shall  any  sale  for  a  default  thereunder  be  valid,  nor 
shall  any  satisfaction  or  assignment  of  said  mortgage,  or  release 
of  said  mortgaged  property,  or  any  part  thereof,  be  recorded  or 
filed  or  received  therefor  by  any  officer  unless  there  shall  be 
delivered  therewith  a  receipt  as  herein  provided,  showing  the 
payment  of  the  tax  due  as  hereby  imposed,  and  any  interest  and 
arrearages  thereon. 

§  7.  The  officer  to  whom  such  taxes  shall  be  paid  shall  semi- 
annually,  on  the  first  day  of  and 

pay  to  the  comptroller  of  the  state,  the  moneys  so  received  by 
him,  after  deducting  a  commission  of  one  per  cent  hereby  fixed 
and  allowed  as  compensation  for  his  services  and  expenses, 
together  with  a  detailed  statement  of  the  date,  amount,  from 
whom  received,  amount  of  mortgage,  tune  to  run,  and  location 
of  property. 

§  8.  No  mortgage  paying  the  tax  herein  provided  for  shall 
be  otherwise  taxable  for  state  or  local  purposes. 

§  9.  This  act  shall  take  effect  immediately. 


TESTIMONY 


New  York,  December  13,  1892. 

Pursuant  to  resolution  passed  April,  1892,  the  joint  committee 
on  taxation  met  at  the  Hotel  Normandie,  New  York,  December  13, 
1892,  at  2  p.  m. 

Senator  Charles  P.  McClelland  was  elected  chairman. 

M.  B.  Redmond,  on  motion,  was  appointed  sergeant-at-arins. 

Messrs.  Thomas  C.  Creamer  and  Andrew  J.  Hamilton  were 
appointed  counsel  to  the  committee. 

William  L.  Milligan  was  appointed  stenographer. 

The  sergeant-at-arms  was  directed  to  confer  with  the  commis- 
sioner of  public  works,  with  a  view  to  securing  a  room  in  the 
city  hall  or  county  court  for  future  meetings  of  the  committee. 

On  motion,  it  was  ordered  that  the  committee  meet  December 
14th,  at  the  Hotel  Metropole,  New  York,  at  2  p.  m. 

On  motion,  the  committee  adjourned. 

New  York,  December  14, 1892. 

The  committee  met  at  the  Hotel  Metropole  pursuant  to  adjourn- 
ment, all  the  members  thereof  being  present. 
The  meeting  was  called  to  order  by  the  chairman. 

Thomas  L.  Feitner,  being  duly  sworn,  testified  as  follows: 
By  Mr.  Creamer. 

Q.  You  are  commissioner  of  taxes  in  New  York  city?  A.  Yes, 
sir. 

Q.  How  long  have  you  been  such?    A.  A  little  over  nine  years. 

Q.  Have  you  read  the  resolution  authorizing  this  committee  to 
investigate  the  affairs  of  your  department  concerning  what  is  set 
forth  in  said  resolution?  A.  I  have. 

Q.  What  is  your  judgment  concerning  the  just  cause  for  com- 
plaint regarding  the  unequal  taxation  on  real  and  personal  prop- 
erty, resulting  from  recent  legislation,  concerning  personal  prop- 


26 


erty  particularly  —  the  taxation  on  personal  property?  A.  I 
don't  know  what  I  can  say  about  that  in  a  general  way;  the  only 
acts  that  seern  to  affect  the  question  of  taxation  lately  passed  is 
the  act  requiring  a  tax  for  incorporations. 

Q.  To  which  act  do  you  refer;  how  recent?  A.  The  last  two 
or  three  years;  I  have  forgotten  the  year  now  in  which  a  per- 
centage of  tax,  based  upon  the  amount  of  capital  under  which  the 
corporation  is  to  be  formed.  In  my  experience  it  is  often  stated 
as  a  matter  of  information  by  people  coming  into  the  office  that 
that  has  a  tendency  to  compel  them  to  incorporate  under  the  laws 
of  other  States. 

Q.  You  refer  to  the  one-eighth  of  one  per  cent  on  the  incor- 
porating of  companies?  A.  Yes,  sir;  the  incorporating  of 
companies. 

Q.  But  that  has  nothing  to  do  with  your  office?    A.  No,  sir. 

Q.  It  is  the  county  clerk's  office,  I  believe?  A.  The  State 
Comptroller. 

Q.  But  the  articles  of  incorporation  are  filed,  and  when  filed 
they  pay  that  tax  to  the  State  Comptroller?  A.  Yes,  sir;  I 
might  say  in  connection  with,  that,  so  far  as  our  office  is  con- 
cerned, that  we  are  still  increasing  almost  as  rapidly,  or  about  as 
rapidly,  in  the  formation  of  incorporations  in  the  city  as  we  were 
previous  to  that. 

Q.  There  has  been  no  perceptible  decrease?  A.  There  has  been 
no  perceptible  decrease,  and  I  think  it  can* be  fairly  said  that  there 
is  no  perceptible  decrease  in  the  amount  of  taxes  any  way  that  we 
derive  from  corporations,  whether  they  be  domestic  or  foreign. 

Q.  Now,  commissioner,  we  will  go  back  to  the  act  of  1880,  and 
subsequent  legislation  amendatory  of  that  act,  which  it  was  con- 
sidered inaugurated  a  new  era  in  the  taxation  of  personal  prop- 
erty, more  particularly  for  such  purposes;  a  few  years  later,  I 
believe,  you  were  commissioner  of  taxes  —  nine  years,  you  said, 
and  therefore  previous  to  that  you  could  not  very  well  give  this 
committee  what  effect,  if  any,  the  operations  of  that  act  had, 
but  you  can  especially  as  to  the  amendments  that  were  made 
subsequent  to  your  tenure  of  office  as  commissioner,  on  the 
business  interests  as  you  have  judged  by  the  reports  made  to 
your  office?  A.  That  act  had  not  any  effect  in  the  least,  for 


27 

this  reason,  that  when  a  corporation  is  assessed  by  the  State 
Comptroller,  whatever  amount  we  may  find,  take  a  special  cor- 
poration, whatever  amount  we  may  find  of  the  valuation  of  its 
capital,  the  tax  will  be  applied  to  that  corporation  upon  that 
amount,  less  the  State  rate,  so  that  what  would  have  originally 
been  collected  on  the  full  rate  by  the  city  without  regard  to  that 
act,  the  State  only  gets  its  percentage  from  the  comptroller, 
when  it  otherwise  would  have  got  it  directly  through  the  city. 

Q.  You  did  not  notice  that  there  was  any  perceptible  falling 
off  after  the  inaugration  of  that  system  of  paying  into  the  State 
treasury?  A.  No,  sir. 

Q.  In  lieu  of  paying  into  the  city  treasury?  A.  You  under- 
stand how  that  operates;  as  an  illustration,  to-day,  for  instance, 
I  have  not  got  the  exact  figures,  but  it  runs  about  this  way  — 
we  find  over  two  hundred  and  odd  millions  of  taxable  value 
upon  corporations  and  individuals. 

Q.  This  year  how  much  do  you  say?  A.  I  think  two  hundred 
and  odd  millions;  out  of  that  there  may  be  over  one  hundred  and 
odd  millions  as  against  corporations;  if  that  act  was  not  in 
effect  we  would  have  collected  the  State  tax  as  well  as  the  local 
tax,  and  been  chargeable  by  the  State  for  the  whole  amount; 
now,  that  act  operating,  we  collect  only  the  local  tax,  and  the 
State  collects  the  direct  tax. 

Q.  Was  there  not  a  large  falling  off  in  the  amount  of  personal 
assessed  property  on  the  tax  books  about  that  period?  A.  I 
don't  remember. 

Q.  Will  you  please  furnish  the  committee,  commissioner,  for 
its  next  meeting,  the  reports  of  your  office  covering  that  period  - 
perhaps  you  had  better  get  some  years  previous,  so  that  we  will 
have  a  record  to  know  whether  the  falling  off  in  the  amount  was 
in  proportion  to  what  was  collected  by  the  State  treasury:  I 
think  we  had  better  have  the  reports  on  that,  so  that  we  will  be 
able  to  get  at  it  more  practically?  A.  I  will  furnish  all  the 
reports  of  our  department. 

Q.  Did  you  understand  at  the  time  those  personal  tax  laws 
were  made  that  exempted  from  all  local  taxes  property  that 


28 


previously  had  been  subject  to  taxation?  A.  No,  sir;  it  did  not; 
for  State  purposes,  of  course,  but  not  for  local  purposes. 

Q.  Section  4  of  the  act  of  1880  says:  "The  lands  and  real 
estate  of  life  insurance  companies  shall  continue  to  be  assessed 
and  taxed  where  situated,  for  State,  city,  town,  county,  village, 
school  or  other  local  purposes,  but  the  personal  property  of  said 
companies,  and  shares  of  stock  therein,  shall  hereafter  be  exempt 
from  assessment  or  taxation,  except  as  in  this  act  prescribed;" 
this  act  prescribes  for  taxation  on  land  and  real  estate;  it  is 
the  act  of  1880?  A.  Well,  that  act  was  tested,  you  know,  in  the 
Court  of  Appeals,  as  to  exempting  for  local  purposes,  and  the 
court  held  that  it  was  a  State  act,  applicable  for  State  purposes, 
and  they  were  not  exempt  for  local  purposes. 

Q.  And  do  you  collect  to-day  for  local  purposes  from  those 
corporations  other  than  a  tax  on  their  real  estate?  A.  We  do. 

Q.  Will  you  please  furnish  a  memorandum,  and  furnish  the 
committee  a  statement  concerning  whatever  branch  of  these  cor- 
porations the  committee  decide  to  inquire  about  for  its  informa- 
tion? A.  I  will. 

Q.  That  will  be  one  of  the  points  we  want  to  cover  at  the  next 

meeting?    A.  Yes,  sir. 

Q.  Then,  in  your  judgment,  the  recent  legislation  concerning 
a  tax  on  corporations,  or  the  tax  that  is  imposed  when  they  file 
their  articles  of  incorporation,  has  not  affected  the  commercial 
or  business  interests  of  the  people  of  this  State?  A.  That  is 
my  judgment;  the  effect  of  the  general  laws  without  regard 
to  those  special  acts  may  be  a  different  question.  The  situation 
is  that  under  the  decisions  of  the  Court  of  Appeals  allowing 
deductions  for  debts,  that  to  collect  or  make  assessments  that 
would  justify  public  opinion  upon  the  amount  of  property  that 
might  be  located  here,  is  next  to  impossible;  we  know  not  what 
the  effect  of  this  new  act  passed  by  the  last  Legislature  is  going 
to  have  upon  that  very  question  of  indebtedness,  because  its 
operation  has  not  begun  and  won't  begin  until  the  second  Monday 
in  January  in  the  city  of  New  York,  but  we  look  forward  to 
quite  an  improvement  on  the  question  of  indebtedness  being 
an  offset  as  against  taxable  personal  property. 


By  the  Chairman. 

Q.  You  refer  to  the  General  Corporation  Act?  A.  No,  sir; 
to  Deyo's  act  on  general  securities,  buying  United  States  bonds 
and  creating  debts  for  the  purpose  of  evasion,  nontaxable  securi- 
ties, etc. 

Q.  It  is  a  fact,  is  it  not,  that  people  residing  in  this  State 
incorporate  in  other  States;  would  you  kindly  state  to  the  com- 
mittee the  reason  why  they  do  incorporate  in  other  States?  A. 
Of  course,  we  do  not  obtain,  always,  the  inside  information,  but 
as  a  lawyer  of  practice,  and  upon  inquiry,  without  having  author- 
ity to  inquire,  as  a  mere  matter  of  casual  inquiry,  sometimes, 
when  they  come  into  the  office,  it  is  not  alone  this  special  tax 
upon  incorporations,  but  it  is  claimed  that  on  account  of  the 
filing  of  the  usual  reports  which  is  required  for  State  organiza- 
tions, that  there  is  a  liability  of  the  shareholders  that  arises 
under  the  laws  of  this  State,  and  for  that  reason  they  prefer  to 
organize  in  New  Jersey  or  some  other  State;  that  our  laws  are 
more  strict  if  they  do  not  file  their  reports  annually  and  specific- 
ally as  to  the  items  of  assets.  I  think,  on  the  other  hand,  that 
the  State,  from  what  I  have  heard,  is  maintaining  a  reputation 
which  is  becoming  a  credit  system  for  the  corporations  of  this 
State  to  continue  the  condition  that  they  have;  that  corporations 
organized  in  other  States  are  now  beginning  to  be  looked  upon 
as  more  or  less  fraudulent,  while  a  corporation  organized  under 
the  laws  of  this  State  is  beginning  to  be  looked  upon  as  some- 
thing that  is  substantial  and  creditable. 

By  Mr.  Creamer. 

Q.  Take  what  recently  appeared  in  the  public  prints;  the 
National  Cordage  Trust  Company,  having  their  principal  office  in 
New  York  city,  nevertheless,  they  hold  a  meeting  of  their  board 
of  directors  at  Trenton,  New  Jersey,  recently,  and  double  their 
capital  stock  from  ten  to  twenty  million;  what  report  do  you 
remember  was  made  to  your  office  by  that  corporation  concern- 
ing its  business;  does  the  report  of  the  condition  of  the  company 
when  they  approach  the  tax  office  appear  the  same  as  when  they 
met  in  New  Jersey  to  double  their  capital  stock  owing  to  their 


30 

surplus?    A.  It  is  very  difficult  to  answer  any  special  case;  that 
particular  case  I  do  not  remember. 

Q.  I  will  take  that  as  so  conspicuous?  A.  The  probability  is, 
OP  might  be,  that  that  corporation  would  not  have  any  capital 
invested  in  this  State  at  all;  now,  notwithstanding  their  capital 
may  be  fifteen  or  twenty  or  fifty  millions,  under  the  law  of  this 
State,  so  far  as  a  corporation  is  concerned,  we  can  only  assess 
them  upon  the  capital  invested  in  this  State. 

By  Mr.  Hamilton. 
Q.  Engaged  in  business  in  this  State?    A.  Yes,  sir;  tke  lan- 
guage of  the  statute  is  money  invested  in  this  State. 

By  Mr.  Creamer. 

Q.  Their  principal  office  is  in  this  State;  I  take  that  as  a  case 
to  make  inquiry  as  to  how  this  law  worked  and  what  you  would 
suggest  to  remedy  the  law  in  case  it  is  defective?  A.  It  would 
not  be  very  different  so  far  as  its  obligation  was  concerned;  on 
the  decision  of  the  Court  of  Appeals  in  the  Union  Trust  Company, 
we  could  not  assess  them  on  their  capital  any  more  than  their 
assets  represented,  so  that  it  may  be  a  mere  form  of  organization, 
unlimited  capital  and  practically  no  assets. 

Q.  Suppose  that  corporation  is  on  your  books  for  assessment, 
will  they  claim  that  they  pay  in  the  State  of  New  Jersey  simply 
by  holding  a  meeting  of  their  directors  in  New  Jersey,  or  at 
their  principal  place  of  business  in  this  city  or  State?  A.  We 
would  not  care  whether  they  claimed  to  pay  in  New  Jersey  or 
not;  we  would  hold  them  here  upon  their  assets  just  the  same 
as  a  domestic  corporation;  they  might  claim  it  was  double  taxa- 
tion, but  nevertheless  it  has  been  the  rule  of  the  office  to  hold 
them  upon  the  capital  invested  here. 

Q.  Suppose  that  stock  is  held  in  bulk  by  two  or  three  indi- 
viduals, when  they  appear  as  individuals  at  the  tax  office  and  their 
principal  wealth  consists  —  at  least,  a  large  part  of  their  wealth 
is  comprised  of  National  Cordage  Company's  stock,  they  can 
say  that  that  stock  is  not  taxable  because  their  corporation 
makes  a  report  to  you?  A.  They  could;  yes,  sir;  and  I  think 
under  the  interpretation  of  the  law  they  would  be  entitled  to. 


81 

Q.  Take  this  company  as  a  sample  and  not  with  any  disposition 
to  ferret  into  their  affairs  more  than  any  other  company,  but 
their  business  affairs  have  recently  been  in  public  print,  and  it 
is  not  private  property  any  longer,  you  have  no  recollection  then 
as  regards  this  particular  corporation  in  regard  to  how  our 
present  tax  laws  do  operate  upon  it?  A.  No,  sir;  only  as  I  have 
stated. 

Q.  Will  you  please  furnish  the  committtee  at  its  next  meet- 
ing an  account  as  to  who  the  individuals  are  who  are  the  officers 
of  that  corporation,  and  what  report  they  make  to  your  office,  and 
what  adjustment  there  is  concerning  their  liability  as  taxpayers 
together  with  what  liability  their  company  assumes  they  are 
under  to  this  State  under  the  tax  laws?  A.  I  will;  I  will  ask 
the  stenographer  to  supply  me  with  whatever  you  require  in 
that  way. 

Q.  Subsequent  to  those  tax  laws  of  1880  and  1881  there  were 
many  amendments  made  after  you  were  commissioner  of  taxes; 
were  any  of  those  amendments  suggested  by  your  board,  do  you 
remember,  that  were  enacted?  A.  We  have  made  many  sug- 
gestions; I  don't  remember  whether  there  were  any  enacted  or 
not;  some  of  them  may  have  been. 

Q.  Do  you  remember  if  any  of  the  amendments  to  the  general 
law  suggested  by  you  were  adopted?  A.  I  don't  remember  any. 

Q.  Do  you  remember  your  board  being  consulted  at  any  time 
in  connection  with  this  subject  previous  to  the  introduction  or 
inauguration  of  legislation  or  the  introduction  of  bills  concern- 
ing the  taxation  of  corporations?  A.  They  have  not  been  con- 
sulted that  I  remember,  except  through  some  examinations  held. 

Q.  How?    A.  By  committees. 

Q.  Then  during  the  nine  years  that  you  have  been  commissioner, 
parties  who  have  been  interested  in  our  tax  laws  have  failed  to 
consult  with  your  office  concerning  legislation  affecting  your 
office?  A.  Yes,  sir. 

Q.  What  is  your  judgment  concerning  such  a  proceeding  inso- 
much as  this  city  is  so  largely  affected;  what  remedy  do  you  sug- 
gest in  the  future?  A.  My  opinion  of  the  situation  leads  me  to 
the  conclusion  that  every  effort  ought  to  be  made  by  the  Legisla- 


tare  to  separate  our  present  system  of  State  and  local  taxation 
which  is  now   combined;  I  look  upon  the  situation  as  to-day 
consisting    of    two    wrongs    that    ought    to    be    remedied,    one 
of    which    is    the    State    Board    of    Equalization,    no    matter 
how  justly,  yet  always  creating  difference  of  opinion  between 
the    different   counties   of   the   State    as   to   true   equalization, 
and  the  other  is  the  general  inequalities  that  exist  in  relation  to 
personal  property;  now,  my  thought  is  that  the  State  ought  to 
continue  in  line  with  the  bills  —  with  the  acts  that  are  now  in 
force  in  relation  to  the  inheritance  tax  and  the  tax  on  corpo- 
rations, by  taking  for  itself  certain  lines  of  capital,  which  there 
can  not  be  any  doubt  of  certainty,  and  raise  the  State  taxes  on 
capital,  and  leave  the  localities,  such  as  the  cities  and  the  lowns 
and  villages,  to  make  their  own  efforts  to  collect  on  personal 
property,  if  those  towns  and  villages  deem  it  necessary  to  do  so; 
the  city  of  New  York,  the  commercial  city  of  the  union  —  the 
financial  city  of  the  union  —  can  not  be  compared  to  your  inland 
cities  or  the  villages  of  this  State;  capital  comes  here  when 
it    don't    go    there,    and    for    the    greater    prosperity    of    our 
city  and  State  I  am  inclined  to   encourage  capital  as  much 
as  possible;  not  to  exempt,  but  to  make  them  pay  a  smaller  pro- 
portion of  taxes  than  they  are  paying  now  upon  the  valuation 
that  we  are  able  to  obtain;  that  is  to  say,  if  we  had  a  low  rate  for 
capital,  capital  would  not  be  discouraged  in  coming  into 'our  city; 
when  we  remember  that  capital,  as  a  general  thing  to-day,  is  not 
earning  more  than  from  two  and  a  half  to  four  per  cent,  and  you 
attempt  to  assess  it  at  a  rate  of  two,  capital  will  naturally 
become  afraid,  and  want  another  mart  where  it  is  not  liable  to  be 
taxed  at  that  rate;  so  my  thought  is  as  I  have  already  expressed, 
that  the  division  should  be  made  as  between  local  and  state  taxa- 
tion, and  the  State  obtain  its  about  eight  millions  —  it  requires 
about  eight  millions  each  year  —  from  capital  alone,  and  leave  out 
each  county  to  raise  its  taxes  either  upon  personal  or  real  or  both, 
as  they  may  deem  necessary;  now,  there  are  certain  lines  of 
capital  that  there  can  not  be  any  doubt  the  State  would  be  able 
to  raise  its  proportion  of  State  taxes  on  and  leave  all  others  free; 
there  are  certain  lines  of  capital  that  the  public  are  not  disposed 


33 

to  encourage  taxation  upon;  for  instance,  bonds  and  mortgages; 
you  know  that  as  well  as  I,  but  it  seems  to  me  that  on  bonds  and 
mortgages  alone,  at  one  mill  —  at  a  tax  rate  of  one  mill  —  the 
State  would  be  able  to  raise  all  its  taxes  and  exempt  them  for  local 
purposes,  or  ten  dollars  upon  ten  thousand  dollars;  the  effect  of 
such  a  small  tax  upon  bonds  and  mortgages  would  not  destroy  or 
affect  capital  coming  into  this  State;  if  we  find,  as  we  do  iind, 
bonds  and  mortgages,  under  the  head  of  individuals,  we  assess 
them  at  the  rate  of  185 .  in  the  city  of  New  York,  when  their 
income  is  only  four  and  a  half  to  five  per  cent,  you  can  understand 
why  a  considerable  amount  of  capital  will  not  come  into  the  city 
of  New  York  for  investment  because  of  that  condition  of  affairs, 
while  if  the  State  assessed  those  very  things  at  the  rate  of  one 
mill,  and  exempted  them  from  local  taxation,  the  whole  State 
tax  could  be  raised  and  the  localities  might  be  allowed  to  seek 
other  capital  that  may  be  within  its  precincts,  without  any  inter- 
ference by  the  State,  and  under  a  revenue  code  of  their  own,  and 
do  that  which  was  just  and  wise  for  their  localities ;  I  might  j;ive 
you  one  or  two  other  lines  of  capital  that,  if  this  particular  Pne 
did  not  accomplish  the  purpose,  the  others  would,  although  I 
would  not  be  disposed  to  go  so  far  as  to  exempt  those  other  Hnes 
from  local  taxation;  my  disposition  would  be  to  allow  them  to  be 
taxed  at  a  small  rate,  as  corporations  are  now  taxed  under  the  act 
of  1880,  and  then  leave  them  still  liable  to  local  taxation,  but  the 
purpose  of  it  all  being  to  separate  the  general  laws  of  this  State, 
so  far  as  taxation  is  concerned,  affecting  New  York  city  and  the 
little  towns  or  villages  throughout  the  State  in  the  same  way, 
though  no  comparison  can  be  made  in  relation  to  its  interests  and 
business  life;  the  subject  of  estates  is  one  which  is  also  somewhat 
objectionable  generally  to  the  minds  of  the  public  of  being 
assessable,  but  I  can  understand  how  the  State  could  raise  all 
its  taxes  from  estates  very  readily,  and  exempt  them,  if  you 
please,  from  local  taxation,  and  that  would  eliminate  a  most  diffi- 
cult question  that  we  have  to  meet  to-day,  and  that  is  the  residence 
of  the  executors  or  trustees;  the  three  executors  being  in  exist 
ence,  one  in  this  county,  one  in  Westchester  and  another  in  New 
5 


Jersey,  under  our  present  condition  of  affaire,  if  the  New  York  and 
Westchester  representatives  determine  that  the  New  Jersey  exe- 
cutor or  trustee  should  be  the  managing  officer  of  that  estate,  and 
the  effects  of  that  estate  deposited  in  the  State  of  New  Jersey, 
our  courts  hold  that  we  can  not  hold  them  for  anything,  even  if 
their  assets  be  evidence  of  indebtedness,  such  as  bonds,  notes, 
claims  and  things  of  that  sort,  all  of  which  may  be  as  against  indi- 
viduals in  this  State,  may  be  secured  on  property  in  this  State; 
now,  I  can  see  how  the  State  might  compel  as  every  executor  and 
trustee  files  an  inventory  of  his  estate  in  the  beginning  of  his 
administration,  and  that  such  inventory  might  be  filed  with  the 
Comptroller  of  the  State,  and  the  executors  and  trustees  assessed 
not  at  the  residence  of  the  executors,  but  at  the  residence  of  the 
decedent,  which  could  be  made  the  permanent  taxing  place,  so 
that  that  difficulty  might  be  obviated;  the  purposes  of  those 
suggestions  are  more  to  carry  out  the  line  of  thought  coming  to 
me  from  experience  of  the  way  to  overcome  the  difficulties  of  our 
present  system  of  taxation,  which  leads  towards  the  separation 
of  the  State  and  local  taxation;  I  think  that  is  about  all  in  that 
line  of  thought. 

Q.  Eeferring  to  the  action  at  Albany  in  connection  with  the 
administration  of  your  office,  recently  —  the  commission  to  revise 
the  corporation  laws  of  this  State,  did  they  consult  at  any  tune 
with  your  office  —  Professor  Collins?  A.  Not  that  I  ever  heard 
of;  there  might  have  been  a  consultation  with  our  president  that 
we  never  heard  of. 

Q.  Notwithstanding  your  department  is  so  important  a  factor, 
more  particularly  as  regards  the  collection  of  the  State  tax,  you 
have  not  since  you  have  been  commissioner,  these  last  nine  years, 
ever  been  consulted  in  connection  with  the  passage  of  recent  bills 
or  laws  affecting  your  office?  A.  No,  sir;  we  have  not  that  I 
remember. 

By  Assemblyman  Quigley. 

Q.  Has  your  department  ever  submitted  any  proposed  changes 
in  the  tax  laws  of  this  State  during  your  admiistration?  A- 
Yea>  «*»  some  changes. 


35 

Q.  That  is  to  the  Legislature,?  A.  Yes,  sir;  I  know  we  have; 
there  is  one  in  my  mind  now,  because  I  happened  to  prepare  the 
bill  and  submit  it  myself;  I  think  it  was  about  in  1884,  and  that 
is  relative  to  the  taxation  of  corporations,  known  as  telegraph 
and  electric  companies,  I  think;  in  1854  there  was  an  act  passed, 
I  think,  for  the  formation  of  telegraph  companies  which  deter- 
mined the  valuation  of  the  capital  of  a  telegraph  company  to  be 
based  upon  the  valuation  of  construction  or  reconstruction  of  their 
poles  and  wires,  so  I  submitted  an  act  repealing  that  act,  and  leav- 
ing them  then  necessarily  under  the  general  act  so  far  as  other 
corporations  were  concerned ;  we  can  not  get  any  taxes  out  of  those 
corporations. 

By  Mr.  Creamer; 

Q.  You  submitted  a  bill  to  become  a  law?  A.  Yes,  sir;  it  was 
printed  in  the  lower  house  and  that  was  the  end  of  it. 

By  Mr.  Quigley.- 

Q.  What  would  have  been  the  effect  if  that  law  had  been  put  on 
the  statute  books?  A.  I  know  no  reason  why  telegraph  compa- 
nies and  companies  of  that  kind  should  not  stand  the  same  as 
other  corporations;  what  the  effect  will  be  absolutely  I  can  not 
tell  until  we  see  the  returns  and  how  much  they  will  be  liable  for 
under  that  act. 

Q.  Will  it  have  a  tendency  to  increase  the  tax  on  this  property? 
A.  I  think  so ;  without  any  doubt. 

By  Mr.  Coggeshall. 

Q.  What  were  the  provisions  of  this  bill?  A.  Eepealing  the  act 
of  1854. 

By  Mr.  Creamer. 

Q.  Exempting  them?  A.  Making!  that  the  basis  of  their  capital 
stock. 

By  the  Chairman. 
Q.  The   cost  of   construction?    A.  Or  reconstruction. 

By  Mr.  Guenther; 
Q.  Would  you  suggest  the  repeal  of  that  law?    A.  Yes,  sir. 


36 

*y  Mr.  Quigley. 

Q.  Since  that  time  there  has  not  been  any  material  chj 
made  regarding  the  act  of  1854?  A.  No,  sir;  before  I  entered 
the  department,  the  opinion  of  the  corporation  counsel  of  the 
city  was  had  as  to  upon  what  basis  we  would  value  those  corpo- 
rations, and  his  answer  was  that  the  act  of  1857  in  relation  to 
corporations  generally  did  not  repeal  the  act  of  1854,  and  he 
said  we  would  have  to  follow  the  act  of  1854;  you  can  see  that 
since  1854,  the  Legislature  has  made  poles  and  wires  real  estate 
for  assessable  purposes,  and  as  the  measure  of  the  valuation  of 
its  capital  is  based  upon  poles  and  wires,  and  they  are  already 
assessed,  there  is  nothing  to  assess  in  the  capital. 

By  Mr.  Creamer. 

Q.  That  is  deducted  from  the  capital?    A.  Yes,  sir. 

Q.  What  proportion  does  that  generally  bear  to  the  capital? 
A.  Nothing  at  all. 

Q.  There    is  <  some    proportion?     A.  Comparatively,    I    am 
speaking. 

Q.  Can  you  give  the  committee  an  idea  as  to  what  return  those 
telegraph  companies  do  make?  A.  I  can  give  you  the  figures 
we  have. 

Q.  In  round  numbers,  just  an  idea?  A.  I  could  not  give  you 
any  figures  now;  I  will  have  to  give  you  the  figures  from  the 
returns  when  they  make  a  report;  we  do  not  assess  them  on  the 
capital  at  all. 

Q.  Are  they  exempt?  A.  Yes,  sir;  practically  exempt,  because 
the  valuation  of  the  poles  and  wires  we  assess  as  real  estate, 
therefore,  they  are  not  liable  for  anything. 

Q.  Under  the  general  law?  A.  They  do  not  come  under  the 
general  law. 

Q.  What  special  act?    A.  1854. 

Q.  That  has  never  been  disturbed?    A.  No,  sir. 


By  the  Chairman. 
Q.  To  make  it  plain,  what  is  the  basis  of  valuation  in  assessing 
a  telegraph  company;  what  is  taken  into  consideration  in  fixing 
the  value;  can  you  tell  the  committee  that?    A.  The  poles  and 
wires  are  the  only  basis;  that  is  practically  the  situation. 


37 

By  Mr.  Quigley. 

Q.  Is  it  a  fact  that  the  telegraph  companies  doing  business 
in  the  city  of  New  York  file  any  return  as  to  the  value  of  their 
real  estate  based  upon  their  value  of  the  poles  and  wires  and 
also  the  buildings  they  own?  A.  Yes,  sir;  of  course,  the  buildings 
are  assessed  separately;  the  report  that  they  make  for  the  pur- 
pose of  capital  tax  is  the  value  of  the  poles  and  wires. 

Q.  That  is  considered  real  estate?  A.  Yes,  sir;  that  is  only 
rendered  to  us  for  the  purpose  of  measuring  the  value  of  their 
capital. 

By  Mr.  Coggeshall. 

Q.  The  capital  is  not  assessed  at  all?  A.  It  is  practically 
unassessed. 

By  Mr.  Quigley. 

Q.  Then,  through  the  State,  in  every  village  and  every  city, 
the  poles  and  wires  are  virtually  exempted.  A.  No,  sir;  the 
poles  and  wires  are  assessed  as  real  estate. 

Q.  In  each  locality?  A.  I  don't  know  what  they  do  in  other 
parts  of  the  State;  I  know  it  is  that  way  here  in  New  York  city. 

Q.  It  is  a  general  law?    A.  Yes,   sir. 

Q.  What  I  mean  is,  there  is  local  taxation  on  their  wires  and 
poles  as  real  estate  in  the  locality  in  which  they  are  situated? 
A.  I  don't  understand  your  question. 

Q.  For  instance,  if  they  have  poles  and  wires  in  different  cities 
of  the  State,  are  they  not  assessed  as  real  estate  in  the  different 
cities?  A.  Yes,  sir;  under  the  general  law. 

Q.  That  is  a  tax  collected  in  the  locality?  A.  Yes,  sir;  it  is 
real  estate  and  assessable  as  real  estate  wherever  it  may  be 
situated. 

By  Mr.  Guenther. 

Q.  What  amount  of  personal  property  is  taxed  in  New  York 
city  in  round  figures?  A.  Over  two  hundred  millions. 


38 


By  Mr.  Creamer. 

Q.  Nearly  three  hundred  millions,  is  it  not?  A.  I  think  so;  it 
runs  up  nearly  to  that. 

Q.  Last  year  it  was  over  two  hundred  millions?  A.  Yes,  sir; 
I  think  it  is  about  three  hundred  millions. 


By  the  Chairman. 

Q.  Do  you  recall  the  valuation  of  personal  property  upon  which 
Mr.  Jay  Gould  paid  taxes  in  this  county,  Mr.  Fietner?  A.  Five 
hundred  thousand  dollars. 

Q.  Now,  will  you  tell  the  committee,  if  you  please,  by  what 
method  that  valuation  was  fixed  on  Mr.  Gould's  personal  prop- 
erty; how  your  department  arrived  at  the  valuation  of  $500,000? 
A.  I  think  that  has  been  standing  on  the  books  for  a  number  of 
jears  at  $500,000;  I  don't  know  but  what  it  was  fixed  before  I 
got  into  the  department. 

Q.  To  the  best  of  your  knowledge  your  department  has  simply 
followed  for  a  number  of  years  what  was  fixed  prior  to  that  time? 
A.  Yes,  sir. 

Q.  You  don't  know  of  any  effort  having  been  made  subsequent 
thereto  to  ascertain  whether  Mr.  Gould  had  more  taxable  per- 
sonal property  or  not?  A.  I  think  there  was;  I  think  it  was 
originally  $250,000,  and  it  was  raised  to  $500,000,  now  that  you 
speak  of  it,  but  I  am  not  sure. 

By  Mr.  Coggeshall. 

Q.  How  long  has  it  remained  at  $500,000?  A.  About  four  or 
five  ye"ars,  I  guess ;  I  know  there  was  a  complaint  about  that. 

By  the  Chairman. 

Q.  Have  you  any  recollection  of  anything  that  led  to  the 
increase?  A.  No,  sir;  you  know  our  deputy  makes  the  assess- 
ment originally;  I  don't  know  what  led  to  the  increase  that  year. 

Q.  You  don't  know  of  any  effort  on  the  part  of  the  commission 
to  ascertain  whether  the  valuation  fixed  by  the  department  was 
right,  or  anywhere  near  right?  A.  We  are  always  making  what- 


39 

ever  effort  we  can,  but  unless  we  have  some  fair  information  as 
to  the  justification  of  an  increase,  we  do  not  increase;  we  do  not 
believe  in  using  the  department  —  I  don't  want  to  use  such  a 
hard  expression  —  as  blackmailing  the  citizens  of  this  city;  we 
want  to  do  the  just  and  fair  thing  to  all,  no  matter  whether  it  is 
Jay  Gould  or  Tom  Brown,  the  small  shoe  store  man;  we  want  to 
treat  them  all  alike;  at  the  same  time,  there  is  no  telling  on 
account  of  our  condition  of  affairs  what  any  man  is  worth  in 
taxable  assets. 

Q.  The  only  object  I  had  in  asking  those  questions  in  relation 
to  Mr.  Gould  was  to  ascertain  by  what  method  your  department 
reached  a  basis  of  valuation  of  personal  property?  A.  The 
deputy  makes  the  assessment,  and  if  it  is  too  high  they  come  in 
and  complain  and  swear  it  down. 

Q.  And  in  the  absence  of  any  complaint  of  excessive  valuation, 
does  the  commission  uniformly  approve  the  action  of  the  deputy? 
A.  They  uniformly  approve  unless  they  have  some  good  reason 
to  disapprove,  from  any  knowledge  they  may  have. 

Q.  Do  you  recall  any  instance  where  the  commission  has 
inquired  into  the  action  of  the  deputy  in  fixing  the  valuation 
where  it  was  deemed  too  low?  A.  Yes,  sir;  we  have  got  some 
information  from  some  outside  people,  and  we  have  instructed  the 
deputy  to  increase  the  assessment,  and  in  every  case  that  I 
remember  they  not  only  swore  off  the  assessments  that  were 
increased,  but  took  the  whole  thing  off. 

By  Mr.  Coggeshall . 

Q.  In  the  cases  you  suggest,  a  person  appears  before  the  coin- 
mission  and  makes  oath  as  to  the  tax  being  excessive;  are  there 
other  witnesses  produced  usually,  or  is  it  upon  that  affidavit 
or  oath,  and  the  evidence  given,  that  the  commission  feel  bound 
to  reduce  it?  A.  As  a  general  rule,  it  is  on  the  affidavit,  but  it  is 
not  in  the  sense  of  an  affidavit;  it  is  an  examination  made  by  the 
commissioners,  going  into  all  the  assets  of  the  individual  —  all 
the  debts  that  he  may  claim;  they  very  often  upset  them  on  the 
question  of  indebtedness,  they  claiming  that  a  liability  is  a  debt 


40 

under  the  statute;  we  examine  about  ten  thousand  every  year  in 
our  department,  and  again  and  again  we  have  been  able  to  hold 
people  who  expected  to  be  able  to  swear  off. 

Q.  Do  you  subpena  parties  other  than  those  interested?  A. 
Not  often,  but  we  do  if  we  have  any  question  about  it. 

By  the  Chairman. 

Q.  Assuming  that  the  published  accounts  of  Mr.  Gould's  hold- 
ings were  anywhere  near  correct,  in  your  opinion  was  he  suffi- 
ciently assessed  by  your  department  for  personal  estate  during 
the  last  year  of  his  life?  A.  We  can  not  have  any  positive 
opinion  about  that  to-day;  Mr  Gould  may  have  forty  million  of 
debts  for  all  we  know;  it  was  stated  by  Mr.  Depew  once  to  us 
that  Mr.  Vanderbilt  maintained  twenty  millions  of  debts,  because 
he  could  make  the  difference  between  four  and  seven  per  cent, 
and  that  would  absolutely  wipe  off  all  his  taxable  assets. 

Q.  Could  >ou  furnish  to  the  committee  such  information  as 
your  department  may  possess  covering  the  last  five  years  of  the 
indebtedness  sworn  to  by  Mr.  Gould?  A.  If  there  is  any;  yes.  sir. 

Q.  If  any?    A.  Yes,  sir. 

Mr.  Creamer. —  I  also  add  the  report  concerning  the  Western 
Union  Telegraph  Company. 

By  Mr.  McClelland. 

Q.  And  such  information  or  record  as  your  department  have  of 
any  effort  that  was  made  to  ascertain  the  holdings  of  Mr.  Gould 
liable  to  taxation  as  personal  property?  A.  All  right;  you  must 
remember,  you  know,  from  what  I  have  seen  —  I  have  been  read- 
ing the  will  —  the  great  part  of  that  estate  is  untaxable  assets; 
of  course,  all  his  stocks  are  untaxable. 

By  Mr.  Stranahan. 

Q.  That  Western  Union  is  all  untaxable?  A.  Yes,  sir;  the 
Manhattan  Elevated  railroad  is  untaxable,  so  that  we  have  to 
come  down  to  bonds,  so  far  as  he  is  concerned. 


By  Mr.  Creamer: 

Q.  And  his  annual  income  is  taxable?    A.  No,  sir. 

Q.  The  amount  of  money  he  has  on  hand?  A.  Yes,  sir;  of 
course,  anything  of  that  sort;  it  is  not  taxable  as  income. 

Q.  I  mean  the  accumulation  from  those  large  properties?  A. 
Yes,  sir, 

By  Mr.  Stranahan. 

Q.  Did  the  $500,000  represent  both  real  and  personal  prop- 
erty? A.  No,  sir. 

Q.  Do  you  now  recall  the  taxation  on  real  property?  A.  No, 
sir;  we  do  not  assess  real  estate  as  against  individuals  in  the 
city  of  New  York;  under  the  Consolidation  Act  we  assess  as 
against  land  and  buildings  alone  by  ward  and  block  numbers, 
and  if  we  have  not  the  name  -correct  it  don't  affect  the  individual; 
we  are  not  supposed  to  know  who  the  owners  of  real  estate  are. 

By  Mr.  Coggeshall. 

Q.  You  spoke  about  raising  money  from  bonds  and  mortgages 
for  the  purpose  of  defraying  State  taxes;  is  it  not  extremely 
difficult  to  get  at  bonds  and  mortgages  for  the  purpose  of  taxa- 
tion? A.  I  don't  know  that  it  is  so  very  difficult. 

Q.  They  escape  taxation  a  good  deal;  do  they  not;  what 
would  you  suggest  in  the  way  of  a  law  to  reach  them?  A. 
They  escape  on  account  of  debts  the  way  all  property  does; 
there  is  no  necessity  of  allowing  debts  as  an  offset. 

Q.  Would  you  suggest  a  remedy  not  to  allow  deductions  on 
account  of  indebtedness?  A.  Yes,  sir. 

Q.  Make  personal  property  subject  to  the  same  rule  as  real 
estate?  A.  So  far  as  State  purposes  is  concerned,  and  it  then 
would  be  practically  assessing  real  estate,  because  the  security 
is  upon  real  estate,  but  it  would  be  eliminating  this  question  of 
equalization  as  between  the  different  counties,  and  leave  us  a 
certainty  as  to  the  amount  of  capital,  whatever  that  may  be, 
whether  higher  or  lower. 


42 

By  the  Chairman. 

Q.  The  object  of  my  question  was,  while  not  intending  to 
criticise  your  department,  to  ascertain  whether  the  fault  lies 
in  the  law  as  it  stands  or  the  execution  of  it;  in  order  that 
I  may  make  my  purpose  plain,  we  want  to  know  if  it  is 
possible,  whether  or  not  the  personal  property  of  to-day 
could  not  be  reached  under  the  present  law?  A.  I  don't  think  it 
could;  I  will  tell  you  the  reason  why;  suppose  we  had  raised  Mr. 
Gould  to  one  million  dollars  or  five  millions  of  dollars,  if  you 
please,  he  could  regulate  without  doing  injustice  to  the  present 
laws  —  he  could  regulate  his  investments  in  an  instant  by  exchang- 
ing his  bonds  for  stock  and  leave  us  in  a  position  where  we  would 
not  be  able  to  obtain  a  cent  from  him;  or,  he  might  in  his  case, 
in  place  of  residing  in  New  York  city,  claim  Ms  residence  in 
Westchester;  he  was  just  as  much  of  a  resident  in  Westchester 
almost  as  he  was  in  New  York  city;  in  that  way  again  we  would 
have  lost  him. 

Q.  So  far  as  personal  property  is  concerned  your  main  objection 
to  the  present  law  is  that  it  is  easily  evaded?  A.  Easily  evaded. 

Q.  And  you  would  recommend  the  amendment  of  the  law  at 
least  to  the  extent  of  wiping  out  the  provisions  which  allows  one 
an  offset  by  indebtedness  from  taxation?  A.  For  State  purposes; 
I  don't  go  so  far  as  that  in  relation  to  our  general  condition,  if  it 
is  to  continue  as  it  is;  if  we  can  not  adopt  a  radical  system  of 
change,  something  in  the  line  that  I  have  suggested,  leaving 
local  authorities  to  look  after  their  own  interests,  all  these  intan- 
gible and  uncertain  personal  interests  or  assets,  why,  the  present 
system  although  so  very  defective,  had  better  continue  until  we 
radically  change  it. 

Q.  Why  would  not  the  allowance  of  indebtedness  be  just  as 
injurious  in  a  local  sense  as  in  a  state  sense;  you  say  that  you 
only  refer  in  recommending  that  change  to  state  purposes?  A. 
I  want  to  go  so  far  as  to  say  that  the  change  should  lend  up  to 
the  local  authorities  determining  for  the  purposes  of  their  rev- 


43 

enue  code  that  they  want  to  establish,  if  you  may  call  it  a  revenue 
code,  and  if  in  their  judgment  personal  property  was  not  to  be 
assessed  at  all,  they  would  have  the  right  to  do  so,  and  if  debts 
were  to  be  allowed,  they  would  have  the  right  to  say  so. 

Q.  That  is  in  the  line  of  local  self-government?    A.  Yes,  sir. 

Q.  To  have  the  local  tax  raised  by  local  taxation,  for  instance, 
by  legislation  enacted  by  the  board  of  aldermen  of  the  city  and 
county  of  New  York?  A.  It  does  not  need  to  be  by  the  board  of 
aldermen,  although  the  constitution  seems  to  require  the  local 
power  to  be  in  the  board  of  aldermen,  but  you  could  propose 
a  bill  which  would  give  us  or  the  sinking  fund  commissioners  power 
to  prepare  local  laws  for  taxation  purposes,  and  to  cover  your 
constitutional  provisions  have  your  board  of  aldermen  sanction 
them. 

By  Mr.  Mr.  Coggeshall. 

Q.  Then  in  the  rural  localities  the  board  of  supervisors  would 
do  that?  A.  Yes,  sir. 

By  Mr.  Stranahan. 

Q.  Are  you  familar  with  the  bill  in  the  last  Legislature  and  the 
one  preceding  introduced  by  Mr.  Connolly?  A.  Somewhat. 

Q.  Does  that  embrace  your  ideas?  A.  It  allowed  localities  to 
determine  for  themselves  their  tax,  but  still  our  present  system 
would  continue  so  far  as  the  state  was  concerned. 

By  Mr.  Coggeshall. 

Q.  Are  you  familiar  with  the  listing  system  in  vogue  in  some  of 
the  states?  A.  I  have  read  of  it,  I  think,  in  Massachusetts  and 
Illinois. 

Q.  Have  you  any  knowledge  as  to  their  practical  working?  A. 
I  have  not 

Q.  Have  you  any  idea  as  to  that  class  of  legislation  in  this  state 
as  to  the  effect?  A.  I  think  it  would  lead  to  more  certainty  if 
the  listing  system  was  adopted  under  our  present  general  system, 
but  I  am  not  in  favor  of  a  listing  system. 


By  Mr.  Creamer. 

Q.  Coming  back  to  the  taxation  of  mortgages,  you  mention 
one  mill,  as  I  remember  it,  as  being  a  fair  tax;  is  it  not  a  fact 
that  bonds  and  mortgages  generally  escape  taxation  —  that 
there  is  no  taxation  on  bonds  and  mortgages?  A.  I  don't  know 
as  it  is;  we  assess  individuals  and  are  after  them  all  the  time 
whenever  they  own  bonds  and  mortgages  they  pay  upon  them  the 
same  as  any  other  personal  property. 

Q.  Of  the  three  hundred  millions  on  your  books,  deducting 
coiporations  and  bank  shares,  how  much  personal  tax  is  there 
on  the  books?  A.  About  one  hundred  million,  I  believe. 

Q.  Of  that  what  proportion  would  you  consider  mortgages  from 
your  examinations;  ten  per  cent?  A.  I  could  not  give  you  any 
figures  on  that. 

Q.  Are  there  ten  million  out  of  the  one  hundred  million?  A. 
I  would  like  to  answer  you,  but  it  is  impossible,  for  this  reason, 
that  in  our  examination  mortgages  may  turn  up  and  other  things 
may  turn  up  that  are  liable,  and  we  don't  question  as  to  what 
the  personal  property  is  if  we  find  the  valuation. 

Q.  We  will  start  again;  the  bank  shares  and  the  corporation 
capital,  that  is  not  bond  and  mortgage?  A.  No,  sir. 

Q.  You  say  that  is  about  two  hundred  millions?  A.  Yes,  sir; 
I  think  of  the  three  hundred  million. 

Q.  Then,  it  would  leave  about  one  hundred  million  for  all  the 
personal  property   in  this   county?    A.  The  resident   personal 
here  is  $126,000,000. 

Q.  What  year?    A.  This  year,  1892. 

Q.   Nonresident?       A.   Resident     personal;     that     means 
individuals. 

Q.  What  is  the  aggregate?  A.  Three  hundred  and  twenty-three 
million  dollars. 

Q.  Of  what  is  that  made  up?  A.  Insurance  companies, 
$3,205,000;  trust  companies,  $6,695,000;  railroad  companies, 
$29,327,000;  miscellaneous  corporations,  $59,895,000;  then  non- 
resident corporations,  $9,939,000;  nonresident  personal,  $9,497,000; 


45 

resident  personal,  $120,619,000;  shareholders  of  banks, 
$78,180,000. 

Q.  Then,  the  resident  personal  is  $120,019,000?     A.  Yes,  sir. 

Q.  And  non-resident  personal?  A.  Nine  million  four  hundred 
and  ninety-seven  thousand  dollars. 

Q.  That   is  $135,000,000?     A.  Yes,   sir. 

Q.  Can  not  you  and  your  colleague  give  the  committee  an 
estimate  as  to  what  percentage  of  that  $135,000,000,  because 
within  that  sum  must  be  included  the  amount  of  bonds  and 
mortgages  assessed  in  this  county,  what  percentage  of  that 
$135,000,000  is  bonds  and  mortgages;  is  it  one-half?  A.  It  is 
impossible  to  state  that. 

Q.  I  should  think  that  an  examination  of  those  who  apply  for 
an  adjustment  of  their  taxes  would  give  it  to  you;  is  it  ten  per 
cent?  A.  I  can  not  say  as  to  what  percentage  it  is;  it  might  be 
seventy-five  per  cent;  there  is  nothing  to  determine  it. 

Q.  If  it  was  seventy-five  per  cent  bond  and  mortgages  you 
would  be  placing  the  entire  wealth  of  this  city  outside  of  bonds 
and  stocks  at  $35,000,000?  A.  If  that  were  so. 

Q.  That  is  not  at  all  probable?  A.  Not  probable;  there  is  no 
telling,  because,  as  I  say,  the  question  of  the  particular  assets 
does  not  arise  unless  there  is  some  doubt  as  to  the  testimony  of 
the  taxpayer;  if  we  feel  there  is  any  doubt  about  his  testimony, 
then  we  inquire  as  to  the  assets  that  go  to  make  up  that  amount; 
as  to  the  particular  assets,  we  want  to  find  out  how  much  he  is 
worth ;  it  may  be  bonds  of  railroads  or  anything  else. 

Q.  What  I  want  to  show  is  that  in  counties  embracing  cities, 
there  are  a  very  few  corporations  and  banks  in  proportion  to  what 
exist  in  this  county;  that  the  amount  of  personal  property  assessed 
is  quite  large  in  proportion,  and  that  this  city,  owing  to  those 
amendments  made  year  after  year  no  doubt,  to  the  personal  tax 
laws,  while  it  is  generally  believed  that  a  great  share  of  the 
bonds  and  mortgages  existing  here  pay  some  tax;  that  actually 
but  a  very  small  portion  of  the  bonds  and  mortgages  of  this  county 
do  pay  any  tax  whatever?  A.  That  may  be  so  and  there  would  be 
a  reason  for  it;  in  the  first  place,  the  banks  loan  very  heavily  on 
property  in  the  city  of  New  York  —  the  savings  banks  —  and 
they  are  exempt 


46 

Q.  How  heavily  would  you  suppose?  A.  Many,  many  millions; 
the  reports  will  show  that;  then  the  life  insurance  companies, 
they  have  quite  a  market  here  for  their  loans  on  real  estate,  and 
go  into  it  very  heavily;  there  may  be  thousands  and  thousands 
of  individuals  that  have  loans,  as  there  are  no  doubt,  that  are 
not  residents  here. 

Q.  Eight  there;  those  corporations,  excluding  the  savings  bank, 
which  we  do  not  propose  to  interfere  with,  notwithstanding  that 
they  can  erect  buildings  exclusively  for  bank  purposes,  and  very 
extravagant,  some  of  them;  some  of  those  corporations  holding 
those  large  sums  in  their  assets  on  bond  and  mortgage,  collect 
on  an  average  about  five  per  cent,  do  they  not?  They  have 
collected  as  high  as  seven;  in  States  west  and  south,  they  collect 
as  high  as  eight;  still  they  are  exempted  specially;  do  you  think 
that  it  is  a  proper  exemption?  A.  Speaking  of  life  insurance, 
companies? 

Q.  Any  of  those  companies;  I  do  not  wish  to  refer  to 
the  life  insurance  companies  any  more  than  others.  A.  Read 
the  question. 

(Question  repeated.) 

A.  I  don't  favor  exemptJon  of  life  insurance  companies  as  a 
general  thing;  I  don't  know  why  they  are  favored  by  the  State; 
I  don't  know  of  any  other  corporations  that  get  such  an  exemp- 
tion in  the  way  of  personal  property, 

Q,  Now,  as  regards  the  hesitancy  of  capital  to  invest  in  bond 
and  mortgage  in  this  State  and  in  this  county  particularly 
owing  to  this  tax,  that  is  really  a  myth;  is  it  not  true  that  a 
city  bond  on  the  corporation  of  this  city  can  be  sold  in  the  market, 
even  at  a  premium,  at  two  and  a  half  per  cent?  A.  It  is. 

Q.  Do  you  consider  that  there  is  much  difference  in  the  intrinsic 
value  of  a  city  bond  of  the  corporation  of  the  government  of 
this  city,  and  a  first  bond  and  mortgage  on  property  within  the 
limits  of  that  corporation?  A.  No. 

Q.  There  is  very  little  difference?  A.  There  is  very  little 
difference. 

Q.  And  still  the  corporation  of  the  city  of  New  York  can 
obtain  all  the  money  it  wants  at  any  time  for  two  and  a  half  per 


47 

cent,  therefore,  couiniissionpr,  do  you  think  it  would  be  a  great 
hardship  on  capital  invested  here  in  first  bonds  and  mortgages 
to  the  amount  very  likely  of  hundreds  of  millions  to  pay  at  least 
one-half  of  one  per  cent  tax  to  the  city  and  State?  A.  No;  I 
don't  think  that  would  be  a  very  severe  tax. 

Q.  Or  one-fourth  say?  A.  The  only  difficulty  about  the  four 
and  a  half  and  five  per  cent  is  this,  that  capitalists  won't  come 
in  to  the  city  of  New  York  —  certain  capitalists,  I  don't  say  all 
of  them  —  when  they  run  the  risk  of  having  a  two  per  cent  tax 
levied  upon  their  bond  and  mortgage,  and  it  may  leave,  and  I 
have  not  the  least  doubt  it  does  to  a  great  extent  leave,  the  field 
in  the  way  of  line  of  bonds  and  mortgages  very  much  open  to 
the  life  insurance  companies  and  the  savings  banks. 

Q.  Now,  what  remedy  would  you  suggest  concerning  a  manner 
of  proceeding  to  place  upon  the  tax  books  of  the  various  counties 
of  this  State  personal  property  liable  to  taxation;  with  your 
experience  as  to  the  effectiveness  of  this  system  yon  have  already, 
wherein  is  it  defective  and  what  would  you  suggest  as  a  remedy; 
that  is  one  of  the  things  that  this  resolution  inquires  about?  A. 
The  difficulties  I  have  enumerated  when  I  have  spoken  of  indebted- 
ness and  liability  of  transfer  —  special  preparation  to  regulate 
your  affairs  so  far  as  this  city  is  concerned  on  the  second  Monday 
of  January,  changing  the  situs  of  property  and  changing  resi- 
dence, all  of  these  elements  enter  into  the  present  condition  of 
the  taxation  laws,  and  make  them  objectionable  so  far  as  the 
assessment  upon  personal  property  is  concerned  as  against 
individuals;  the  remedy  is  in  the  general  line  that  I  have  already 
given,  so  far  as  my  judgment  directs,  in  separating  the  local  and 
the  State  system  of  taxation;  as  to  the  remedy  for  the  present 
general  laws  and  trying  to  amend  them,  I  don't  think  it  possible 
so  that  you  will  accomplish  very  much;  you  may  make  corrections 
that  will  lead  to  some  benefits,  but  I  do  not  think  that  it  is 
possible  to  get  over  the  difficulties  that  exist  in  relation  to  per- 
sonal property  assessments. 

Q.  If,  for  example,  the  relations  existing  between  New  York 
county  and  adjoining  counties,  Kings  county  and  Westchester, 
where  we  find  that  in  proportion  the  adjoining  counties  are 


48 


assessed  and  no  dou'bt  suffer  from  their  proximity  to  the  larger 
county  in  the  matter  of  taxes,  and  the  amount  they  get  on  their 
books;  take  those  three  counties  located  here  in  the  metropolitan 
district,  to  enlighten  us  on  this  subject  as  to  whether  anything 
can  be  done  there  towards  improving  or  increasing  the  power 
of  your  office  to  properly  hold  those  after  you  assess  them,  I  don't 
know  whether  your  department  is  continuous  year  after  year, 
but  we  will  take  1891  or  1892;  about  how  much  did  you  assess 
personal  property  at  to  commence  with?  A.  About  a  billion  and 
a  half,  I  think,  or  a  billion  and  a  quarter. 

Q.     About  1,500,000,000?    A.  About  that. 

Q.  That  is  the  amount  you  generally  year  after  year  enter  on 
your  books  as  assessed?  A.  Yes,  sir. 

Q.  Do  I  understand  those  10,000  parties  that  object  are  prin- 
cipally responsible  for  the  reduction  of  that  sum  to  300,000,000? 
A.  No,  sir;  we  have  10,000  individuals;  then  we  have  three  to 
four  thousand  statements  from  corporations  in  addition. 

Q.  That  is  what  is  the  cause  of  the  reduction  from  this  large 
sum  year  after  year  entered  on  the  books?  A.  Yes,  sir;  then  we 
have  about  22,000  shareholders  of  banks;  they  do  not  all  come  in; 
if  they  did  it  would  take  the  whole  year. 

Q.  When  a  citizen  who  has  a  personal  tax  notice  that  he  is 
assessed  on  f  50,000  appears  at  your  office  and  his  first  claim  is 
that  he  lives  either  in  Brooklyn  or  Westchester,  what  is  the  pro- 
ceeding generally  now  in  vogue  in  your  office  in  regard  to  this 
matter?  A.  The  commissioner  he  appears  before  examines  him 
under  oath,  and  we  inquire  as  to  the  general  situation,  as  to 
whether  he  has  a  residence  or  any  kind  of  a  residence  here; 
whether  he  has  any  business  here,  and  such  other  information 
as  from  the  beginning  of  the  examination  we  can  follow  out,  you 
know,  from  suggestions  made  by  him ;  if  we  have  any  doubt  about 
the  question  of  his  residence  we  may  resubmit  to  a  further  exami- 
nation by  an  assistant  corporation  counsel,  so  that  he  can  be 
prepared  for  any  defense  that  may  be  made  on  that  question. 

Q.  Suppose  that  he  sets  up  an  answer  that  he  pays  elsewhere? 
A.  It  wouldn't  make  any  difference  with  us. 

Q.  It  doesn't  make  any  difference?    A.  No,  sir. 


49 

Q.  Suppose  in  the  end  that  it  does,  after  you  take  his  affidavit 
to  that  effect;  there  is  no  power  in  your  board  to  ascertain  any- 
thing further  in  relation  to  him,  is  there?  A.  We  have  a  right 
to  examine  him  on  anything  and  everything  relating  to  the  ques- 
tion of  his  residence,  and  we  do  put  him  through. 

Q.  Then  you  think  you  have  full  power  in  those  cases;  that  the 
law  gives  you  full  power  to  hold  or  punish  any  person  making  a 
false  statement  at  your  office  as  to  the  residence  and  his  liability 
for  taxation?  A.  I  have  no  suggestion  as  to  how  you  should 
correct  the  law  so  as  to  make  it  still  stronger  in  the  question  of 
punishment  as  to  non-residence  of  one  claiming  non-residence;  if, 
of  course,  the  question  of  residence  is  a  mere  matter  of  jurisdic- 
tion, as  the  courts  have  often  held,  no  matter  how  we  may  hold 
it  is  a  question  of  jurisdiction,  and  the  court  takes  another  view 
of  it;  that  settles  it. 

Q.  Can  you  give  me  your  opinion  as  to  whether  you  think  the 
law  is  broad  enough  which  gives  you  authority  to  examine,  so 
that  after  you  have  administered  the  oath  to  the  party,  and  you 
find  that  he  has  sworn  falsely  as  to  his  residence,  that  the  law  is 
sufficiently  broad  to  warrant  a  criminal  proceeding  for  punish- 
ment? A.  I  think  the  law  is  broad  enough  for  examination;  as 
to  what  the  criminal  code  says  as  to  punishment  in  a  case  of 
that  kind  I  am  not  able  to  say,  but  let  me  say  here,  the  question 
of  residence  is  based  somewhat,  upon  the  present  statutes,  upon 
the  place  of  business;  if  a  man  has  one  or  more  residences,  and  has 
a  place  of  business,  the  place  of  business  is  to  be  the  determining 
point;  that  is  the  residence  under  our  present  statutes;  now, 
whether  that  might  not  be  added  to  by  which  we  might  still 
further  determine  his  place  of  residence  is  a  question;  I  have  an 
instance  in  my  mind  of  a  person  who  had  three  residences,  one 
here,  one  in  Jersey  and  one  in  Newport 

By  the  Chairman. 

Q.  Who  prefers  to  be  taxed  in  Newport?  A.  I  don't  know 
where  he  prefers  to  be  taxed,  but  he  don't  prefer  to  be  taxed  here; 
the  question  arises  as  to  where  his  residence  is;  he  claims  to  be  a 

7 


50 


resident  of  Jersey,  because  he  has  a  farm  there  with  three  or 
four  or  five  hundred  cattle,  and  we  had  a  very  full  examination  of 
that  individual,  and  concluded  to  hold  him;  that  he  claimed  to  be 
his  business,  as  farming  the  land;  he  is  president  of  a  very  large 
corporation  in  the  city  of  New  York,  and  on  that  ground  we  held 
that  his  place  of  business,  which  we  believe  to  be  his  actual 
business,  we  held  him  to  be  a  resident;  now,  that  don't  involve 
alone  the  question  of  his  individual  liability,  because  he  happened 
to  be  a  trustee  of  a  very  large  estate;  it  involved  a  settlement  in 
relation  to  that  trusteeship. 

By  Mr.  Ahearn. 

Q.  Have  you  ever  had  a  case  before  you  where  a  man  has  made 
fraudulent  statements  as  to  his  residence?  A.  No,  sir;  there  are 
many  men  claiming  residence  which  we  reject,  and  who  pay  under 

that. 

• 

By  Mr.  Coggeshall. 
Q.  There  has  been  no  appeal  from  your  decision?    A.  No,  sir; 
they  held. 

By  the  Chairman. 

Q.  It  would  be  a  fair  assumption  then  that  the  statements  so 

made  were  false?    A.  I  don't  know;  he  might  conclude  that  he 

might  prefer  to  pay  in  the  city  of  New  York. 

B.p  Mr.  Coggeshall . 
Q.  The  rate  of  taxation,  how  has  it  been  with  reference  to  the 
increase  of  real  estate  or  personal  property;  which  has  shown  the 
greater  increase?  A.  I  think  real  estate  is  showing  the  greater 
increase  proportionately;  I  would  not  be  able  to  say;  we  are 
increasing  both  here. 

By  the  Chairman. 

Q.  As  a  matter  of  fact,  there  has  been  a  decrease  in  personal 

property,  hasn't  there?    A.  Not  since  I  have  been  in  the  office; 

it  has  been  growing  since  1883,  but  there  was  a  very  sudden  and 

large  decrease  some  three  or  four  years  before  I  went  in. 


51 

Q.  As  a  matter  of  fact,  is  it  not  less  than  twenty  years  ago?  A. 
I  believe  it  is. 

Q.  The  personal  assessment-roll  ?    A.  I  believe  it  is. 

By  Mr.  Creamer. 

Q.  You  can  suggest  nothing  to  remedy  the  fact  of  the  difference 
between  one  thousand,  five  hundred  million  and  three  hundred 
million;  has  nothing  occurred  to  you  during  all  those  years;  there 
must  be  some  suggestion  that  you  have  often  thought  of  that  you 
can  give  to  this  committee  as  to  what  remedy  there  is  for  this 
wholesale  evasion  of  the  law  by  persons  claiming  to  reside  in 
an  adjoining  county  or  adjoining  States,  or  not  paying  taxes  any- 
where, or  having,  as  you  say,  two  or  three  residences;  is  there 
nothing  you  think  of  now  to  suggest  to  the  committee?  A.  I  can 
not  give  you  anything  to  change  the  present  system  that  would  in 
my  judgment  result  in  any  benefit  other  than  to  radically  change 
it  as  I  have  said. 

Q.  As  regards  the  assessment  of  real  estate  you  have  a  general 
rule  in  the  office,  I  suppose;  what  is  the  character  of  the  rule  that 
you  adopt  to  govern  the  deputies;  that  seems  to  be  a  subject  here 
to  inquire  into  by  the  committee;  I  mean  applicable  to  the  entire 
county?  A.  There  is  no  special  rule;  under  the  statute  the  depu- 
ties make  the  assessments. 

Q.  The  commissioners,  of  course,  revise  and  instruct  the  deputies 
what  the  law  is?  A.  Yes,  sir;  give  them  general  directions  each 
year  for  equalization,  and  so  forth,  and  the  deputies  make  their 
reports  and  swear  to  the  returns. 

Q.  Is  there  any  difference  in  the  course  pursued  between  dwell- 
ings and  business  properties,  or  other  properties,  unimproved, 
business  or  dwellings;  is  it  equally  applicable  to  all  alike?  A.  I 
know  of  no  distinction. 

Q.  Is  there  any  suggestion  you  have  to  make  in  regard  to  the 
assessment  of  real  estate?  A.  Any  difference  in  the  methods? 

Q.  Is  there  any  suggestion  you  want  to  make  to  the  committee 
on  that  subject?  A.  I  don't  think  there  is  anything  I  can  suggest. 

Q.  I  notice  that  the  resolution  refers  to  assessments  for  improve- 


52 

ments  in  different  sections  of  the  city;  is  there  any  suggestion  yo 
desire  to  make  to  the  committee  as  regards  that?  A.  No,  sir;  tha 
is  a  kind  of  independent  body,  although  we  have  the  power  c 
appointment,  as  we  are  an  independent  body. 

Q.  There  has  been  a  wholesale  depletion  of  the  treasury  a 
regards  those  assessments  in  the  last  ten  years;  has  that  ceased 
A.  That  seems  to  have  ceased. 

Q.  That  continued  many  years,  and  according  to  your  knowledg 
it  has  ceased?  A.  Yes,  sir;  they  meet  the  question  now  before  i 
becomes  practically  an  assessment  in  the  board  for  the  confirms 
tion  of  assessments. 

By  the  Chairman. 

Q.  This  question  of  assessment  for  local  improvement  is  regu 
la  ted  largely  by  the  local  authorities,  is  it  not?  A.  Yes,  sir. 

By  Mr.  Creamer. 

Q.  Have  you  any  idea  as  to  the  amount  of  personal  property  exisl 
ing  in  this  city  held  by  residents  abroad  who  rarely  exercise  thei 
citizenship  by  visiting  the  country?  A.  I  know  that  there  ar 
such,  but  how  many  I  would  not  be  able  to  say. 

Q.  What  method  have  you  adopted  the  present  year  towards  mak 
ing  up  or  correcting  your  personal  tax  list?  A.  The  deputy  of  thi 
personal  department  takes  all  the  information  that  he  can  get 
either  through  the  system  of  directories  or  knowledge  that  1 
brought  to  him  by  individuals  or  otherwise  in  making  up  hi 
lists  year  after  year  as  to  residence  and  nonresidence. 

Q.  Your  deputy  having  charge  of  the  personal  tax  bureai 
makes  up  the  list,  generally  taking  the  old  list  as  a  basis?  A 
The  old  list  as  a  basis  and  the  directory  or  other  information  tha1 
may  be  given  to  him  as  to  individuals. 

Q.  Has  any  effort  ever  been  made  to  ascertain  who  the  non 
paying  personal  tax  people  are  outside  of  the  State,  outside  o1 
the  country,  still  having  property  within  this  State?  A.  W< 
very  often  put  them  down  on  the  list  and  make  an  examinatioi 
if  they  turn  up;  if  they  do  not,  we  find  an  affidavit  from  then: 
claiming  nonresidence;  we  may  give  credence  to  it,  or  maj 


53 

hold  them  and  let  them  go  into  court  and  determine  the  question, 
of  their  liability;  it  depends  upon  what  facts  they  may  give 
us  showing  the  question  of  residence  in  their  affidavit,  in  other 
words,  how  full  it  may  be. 

Q.  Some  members  of  the  committee  did  not  hear  your  answer 
as  regards  what  remedy  you  would  suggest  to  reach  those  people, 
those  nonresidents,  both  in  respect  of  counties  and  in  respect  of 
countries?  'A.  I  have  not  considered  that  question  sufficiently 
to  be  able  to  suggest  a  remedy  to-day,  because  it  is  a  very 
difficult  subject  to  be  able  to  overcome,  I  think,  the  question  of 
residence;  the  fact  of  the  matter  is,  for  a  number  of  years  past, 
I  never  dreamed  it  worth  much  to  send  any  suggestions  to  the 
Legislature,  because  I  felt  that  the  Legislatures  were  not  inclined 
to  support  whatever  might  be  suggested  coining  from  the  city. 

By  Mr.  Quigley. 

Q.  Have  you  any  right,  now,  to  collect  any  personal  tax  on 
personal  property  in  this  city  which  is  owned  by  a  nonresident? 
A.  Invested;  yes,  sir;  we  have. 

Q.  Uninvested?  A.  Uninvested;  no;  to  keep  within  the  lan- 
guage of  the  statute  itself,  it  is  sums  of  money  invested  in  busi- 
ness; that  is  the  Statute  of  1885. 

By  the  Chairman. 

Q.  You  think  injustice  has  been  done  the  city  by  reason  of 
the  failure  of  the  Legislature  to  act  in  the  particulars  you  have 
just  been  discussing?  A.  Yes,  sir;  I  think  the  city  has  been 
suffering  under  injustice  a  long  while. 

Q.  Your  board  very  frequently  meet,  don't  they?     A.  Yes,  sir. 

Q.  And  yet  the  commissioners  of  taxes  have  satisfied  them- 
selves that  they  have  done  their  part  simply  because  the  Legis- 
lature they  did  not  believe  would  act  if  they  made  any  recom- 
mendation? A.  I  do  not  speak  for  the  board;  I  am  speaking 
for  myself;  we  might  disagree  in  the  board  what  would  be  best 
to  suggest. 

Q.  The  board  has  not  in  recent  years  made  any  recommendation 
to  the  Le-gislature  ?  A.  No,  sir. 


54: 

tty  Mr.  Coggeshall. 

Q.  Did  they  ever  as  a  board?  A.  Yes,  sir;  but  not  in  my 
time. 

Q:  You  have  individually?     A.  Yes,  sir. 

Q.  You  may  have  made  suggestions  to  individual  members 
Df  the  Legislature;  but  have  you  made  any  communication  to 
the  Legislature?  A.  Yes,  sir. 

Q.  That  is,  as  to  the  law  of  1854?    A.  Yes,  sir. 

Q.  The  bill  you  submitted,  you  submitted  to  some  one  who 
represented  the  city?  A.  Yes,  sir. 

Q.  And  it  was  introduced  and  that  was  the  last  you  heard 
of  it?  A.  Yes,  sir. 

Q.  So  that  the  only  effort  that  you  know  of  made  by  your 
department  was  when  you  tried  to  have  that  law  changed  A. 
No;  I  don't  think  that  is  the  only  effort;  I  think  Mr.  Coleman 
made  one  or  two  suggestions  at  different  times;  I  don't  know 
as  I  agreed  with  him  as  to  the  facts. 

Q.  Don't  you  think  that  with  the  consciousness  that  the  law 
was  defective,  and  that  the  interests  of  the  city  were  suffering, 
it  was  the  duty  of  the  tax  commissioners  year  after  year  to  have 
insisted  that  the  Legislature  should  afford  relief?  A.  That  is, 
if  we  agreed;  yes. 

By  Mr.  Coggeshall. 

Q.  The  trouble  was  that  the  House  has  been  divided  against 
itself;  the  commissioners  have  not  been  able  to  agree  upon  a  plan? 
A.  No,  sir. 

By  the  Chairman. 

Q.  Are  we  to  infer  from  your  statement  that  the  board  of 
commissioners  do  not  agree  that  the  law  is  defective?  A.  No, 
sir. 

Q.  Then  you  disagree  as  to  the  remedy?    A.  Yes,  sir. 

Q.  You  don't  know  where  that  bill  that  was  introduced  by 
Connelly  came  from,  do  you?  A.  No. 

Q.  It  did  not  come  from  the  board?  A.  No;  from  the  single 
tax  body,  I  understand. 


55 

By  Mr.  Quigley. 

Q.  I  understand  you  to  say  that  you  have  the  right  to  tax  per- 
sonal property  invested  in  this  state  belonging  to  non-residents; 
now,  what  is  the  use  of  a  non-resident  claiming}  to  be  a  non-resident 
in  such  a  case?  A.  There  is  not  any  in  such  a  case. 

Q.  What  does  your  board  do  in  case  you  find  property  invested 
in  business?  A.  We  hold  them;  that  is  partly  the  sum  I  have 
given  of  |9,000,000. 

Q.  I  understood  you  to  say  that  as  soon  as  you  discovered  such 
property  they  came  in  and  claimed  non-residence.  A.  That  is 
the  question  of  the  residence,  if  he  don't  have  any  property  here; 
if  we  are  claiming  him  as  a  resident  we  are  putting  him  on  the 
roll  as  a  resident  no  matter  where  his  property  was;  taxing  him 
as  a  resident. 

Q.  You  have  a  right  to  tax  property  no  matter  to  whom  it 
belongs?  A.  Yes,  sir;  if  we  assess  him  as  a  non-resident;  non- 
residents within  the  state  too,  by  the  way. 

By  Mr.  Creamer. 

Q.  Have  you  read  the  recent  report  of  the  State  Board  of 
Equalization  —  their  last  report?  A.  I  don't  think  I  got  that; 
I  am  not  sure  whether  I  did  or  not;  I  think  I  did. 

Q.  From  your  experience  what  do  you  think  of  their  claim  that 
there  is  four  thousand  million  of  personal  property  in  this  State 
escaping  taxation;  what  proportion  of  that  four  thousand  millions 
escapes  in  this  county?  A.  I  can  not  say  that  there  is  any  of  it 
escaping  taxation ;  what  proportion  of  that  four  thousand  millions 
you  eliminate  the  question  of  debts  entirely  then  you  may  be  able 
to  geFa  very  large  amount  of  person  property  taxable. 

Q.  You  don't  think  there  is  any  escaping?  A.  Under  the  law, 
no;  whatever  the  law  allows  to  escape  in  the  way  of  debts  and 
transfer  of  securities  temporarily  and  so  on. 

Q.  And  sworn  off?  A.  By  which  they  are  able  to  swear-  off; 
there  mi^ht  be  many  millions  escaping  and  no  doubt  there  are. 


56 

By  the  Chairman. 

Q.  If  personal  property  fails  of  assessment  by  fictitious  debt> 
ifi  not  that  escaping  taxation?  A.  The  Court  of  Appeals  don't 
say  it  is  fictitious  debt;  it  says  the  authorities  have  no  right  to 
inquire  into  the  indebtedness  so  long  as  a  party  swears  it  is  a 
debt;  you  may,  and  the  conscience  of  the  man  may  say  it  is 
fictitious  debt,  but  the  Court  of  Appeals  has  sustained  that. 

By  Mr.  Guenther. 

Q.  What  do  you  think  as  to  an  amendment  to  the  law  per- 
mitting you  to  inquire  into  the  nature  of  the  debt?  A.  We  do 
that,  and  we  claim,  notwithstanding  what  the  Court  of  Appeals 
says  in  regard  to  it  —  we  claim  that  we  have  the  right  and  do 
inquire  into  tli^  kind  of  debt>  and  very  often  hold  people  on  debts 
which  they  claim  to  be  debts,  and  which  we  say  are  not  debts,  but 
merely  a  liability. 

Q.  How  do  you  get  at  the  amount  of  bonds  and  mortgages  held 
in  New  York  city?  A.  We  do  not  gtet  at  bonds  and  mortgages 
personally,  because  bonds  and  mortgages  are  no  different  to  us 
than  any  other  personal  property;  we  assess  the  individual  on  his 
personal  property. 
-Q.  You  get  at  the  facts  as  near  as  you  can?  A.  Yes,  sir. 

By  Mr.  Creamer. 

Q.  Does  the  record  in  the  census  reports  treat  of  bonds  and 
bond  and  mortgage  is  on  record  don't  make  him  liable, 
bond  and  mortgage  is  on  record  don't  make  him  liable. 

Q.  Don't  make  him  assessable?    A.  Yes,  sir. 

Q.  When  you  find  parties  swearing  off  on  the  ground  that  they 
have  a  certain  debt,  do  you  make  any  effort  to  find  out  by  whom 
that  debt  is  owned?  A.  Yes,  sir;  we  have  sometimes,  if  it 
amounts  to  anything. 

Q.  Do  you  assess  that  against  that  party?  A.  We  can  not 
unless  he  is  on  the  roll;  we  do  next  year;  the  time  has  gone  by. 


57 

Q.  If  a  man  came  in  there  and  made  a  statement  and  perjured 
himself,  are  there  powers  vested  in  you  to  hold  him  for  perjury; 
wouldn't  it  have  a  tendency  to  keep  those  people  from  coming 
there  and  making  those  statements?  A.  It  might  be. 

Q.  If  the  law  was  changed,  giving  you  power  to  hold  him  crim- 
inally? A.  It  might. 

By  the  Chairman. 

Q.  Are  you  not  authorized  by  law  now  to  administer  an  oath? 
A.  Yes,  sir;  and  examine. 

Q.  Then  if  you  have  reason  to  believe  that  a  party  has  sworn 
falsely,  all  you  have  to  do  now  is  to  make  a  complaint  against 
him?  A.  Yes,  sir. 

Q.  So  that  as  a  matter  of  fact  the  law  is  broad  enough  to-day 
on  that  point?  A.  As  to  that  question  I  am  not  versed  enough 
to  be  able  to  say  as  to  whether  it  is  broad  enough  or  not;  I  um 
not  in  the  criminal  law  business  and  never  have  been;  I  don't 
know  how  far  the  criminal  statute  goes  in  that  respect. 

Q.  Have  you  ever  known  of  any  case  where  any  party  has  been 
punished?  A.  No,  sir;  I  never  have. 

Q.  Has  it  been  your  practice  to  assess  those  debts  on  the  parties 
holding  them  on  the  next  year's  roll?  A.  We  have  done  it. 

Q.  Have  you  been  successful  in  collecting  the  tax  on  that  debt 
in  the  following  year?  A.  I  don't  know  whether  we  followed  it  up 
so  closely  as  that;  we  give  the  names  to  the  deputy  and  it  goes  in. 

Q.  Then  if  the  parties  should  come  in  and  claim  the  debt  was 
canceled  on  the  following  year,  would  he  evade  the  payment  on 
that  account?  A.  If  the  debt  actually  was  canceled  on  the 
second  Monday  in  January;  our  taxable  condition  day  is  the 
second  Monday  in  January;  whatever  the  condition  of  the  indi- 
vidual is  on  that  day  he  is  liable  for. 

Q.  Have  you  any  suggestions  to  make  by  which  you  can  get  at 
that  amount  on  property  by  any  amendment  to  the  law?  A.  As 
it  is,  the  assessment  is  against  an  individual;  I  don't  know  what 
I  could  suggest  to  cover  the  point  as  to  holding  an  individual 
that  is  non-resident. 

s 


By  Mr.  Coggeshall. 

Q.  Would  the  general  listing  law,  such  as  I  have  referred  to, 
such  as  the  laws  of  Ohio,  Pennsylvania  and  Massachusetts,  reach 
those  people  and  their  assets?  A.  Of  course  that  would  bring 
out  whoever  were  indebted  to  them;  in  that  way  it  would  be  of 
service. 

By  Mr.  Quigley. 

Q.  You  say  that  at  a  certain  period  you  make  up  this  roll?  A. 
Yes,  sir. 

Q.  What  would  you  think  of  an  amendment  to  the  law  which 
would  allow  you  at  any  time  within  a  year  to  place  the  name 
upon  the  assessment  of  the  individual  to  whom  this  debt  is  owed, 
and  collect  the  tax  accordingly;  what  would  you  say  to  such  an 
amendment  as  that?  A.  It  would  not  do  at  any  time  within 
the  year,  but  it  might  at  any  time  which  we  have  for  making  up 
the  roll,  which  would  be  up  to  the  thirtieth  of  April;  for  instance, 
I  think  such  an  amendment  as  that  would  be  good,  because  what 
information  we  might  derive  from  examinations  of  individuals  we 
could  add  to  our  lists  in  the  meantime. 

Q.  Would  not  that  enable  you  to  collect  upon  a  great  deal  of  this 
property  which  represents  the  difference  in  the  amount  you  name 
and  the  amount  you  collect?  A.  I  don't  think  it  would  make  a 
wonderful  difference  in  the  amount ;  I  do  not. 

Q.  Why  not?  A.  That  would  only  apply  to  debts;  I  don't  think 
we  find  out  anything  additional  of  any  account  other  than  indebt- 
edness owed  by  somebody  to  somebody. 

Q.  Is  It  not  a  fact  that  a  large  amount  of  the  personal  tax 
avoided  in  this  county  is  avoided  by  swearing  it  is  a  debt?  A. 
Yes,  sir;  and  practically  two-thirds  of  this  indebtedness  in  the 
city  of  New  York  will  be  indebtedness  on  bonds  and  mortgage 
which  are  not  taxable  because  they  are  in  the  hands  of  a  non- 
taxable  organization. 

Q.  Then  this  amendment  to  the  law  would  be  no  remedy  at  all? 
A.  I  think  it  would  be  an  improvement. 


59 

By  Mr.  Creamer. 

Q.  You  say  they  are  in  the  hands  of  untaxable  corporations?  A. 
Yes,  sir;  I  mean  banks  and  life  insurance  companies. 

Q.  Surely  life  insurance  companies  and  banks  can  not  commence 
to  hold  one-tenth  of  the  bonds  and  mortgages  in  the  city?  A. 
Yes,  sir;  1  think  so,  and  a  good  deal  more. 

Q.  What  is  your  idea  of  the  total  amount  of  bonds  and  mortgages 
in  the  city  of  New  York?  A.  I  think  it  amounts  to  nearly  our 
whole  assessed  valuation. 

Q.  One  thousand   five  hundred  millions,?    A.  Yes,  sir. 

Q.  You  know  that  the  bonds  and  mortgages  held  by  banks  and 
life  insurance  companies  would  not  cover  over  one-third  of  that? 
A.  We  are  drifting  into  figures  which  I  am  not  familiar  with;  I 
would  have  to  look  that  up;  if  you  want  it  looked  up  I  will  give  it 
to  you. 

By  Mr.  Hamilton. 

Q.  The  State  board  of  assessors,  in  their  last  annual  report,  sub- 
mitted to  the  Legislature  in  1892,  make  the  following  statement: 
"The  following  cities  have  increased  their  real  estate  valuations 
last  year  $103,395,195;  in  personal  property  New  York  loses 
$2,703,979,  Brooklyn  loses  $628,469,  Buffalo  increases  $747,115, 
and  Rochester  $369,317."  How  do  you  account  for  that?  A.  I 
think  it  is  partly  accounted  for  by  the  fact  the  law  of  1886 
exempted  insurance  companies  upon  their  assets,  and  you  know 
this  year  the  act  was  amended  by  which  they  were  made  liable 
again;  that  will  fully  account  for  it;  if  I  had  the  figures  here  of 
our  department  I  think  I  could  explain  it;  I  have  not  got  the 
figures  of  1890;  our  figures  of  1893  are  not  complete  yet. 

Q.  You  estimate  1893  at  $323,000,000?  A.  No,  sir;  that  is 
1892  fixed. 

Q.  Then  the  year  previous  was  that?  A.  Eighteen  hundred  and 
ninety-one  as  compared  with  1892  was  321,000,000  as  against 
323,000,000. 

Q.  You  don't  correspond  with  the  official  paper  here?  A.  That 
may  happen  in  this  way:  The  corporations  that  are  directly  liable 


60 

to  the  State  Comptroller  for  their  tax,  the  amount  that  we  assess 
upon  them  is  taken  out  of  the  general  total,  because  they  are 
already  assessed  directly  in  the  State  board's  figures,  and  might  not 
agree  with  ours  in  that  respect;  do  you  see  what  I  mean;  that 
increase  may  be  greater. 

Q.  Why  would  not  the  same  cause  operate  then  in  other  locali- 
ties, Buffalo  for  example?  A.  We  have  started  with  about 
128,000,000  of  deduction  from  the  State  as  corporations  liable 
directly  to  the  State,  and  now  we  have  got  up  to  f  78,000,000  of  val- 
uations in  the  city  of  New  York,  so  that  you  can  see  that  a  difference 
of  one  or  two  millions  would  not  make  much  so  far  as  this  State  is 
concerned  in  assessing  its  valuation  upon  the  personal  property 
of  the  city. 

Q.  Now,  this  is  for  general  purposes,  these  statistics  here  show 
that  in  that  year  New  York  city  lost  the  amount  I  have  stated. 
A.  I  can  not  give  you  any  better  illustration  than  this;  we  have 
raised  for  1892,  |323,000,000  of  personal  property,  which  will  go 
into  the  figures  that  the  State  board  will  fix  our  tax  upon  for 
next  year;  of  that  sum,  323,000,000,  seventy-eight,  about  that, 
will  be  taken  out  for  State  purposes,  because  H  represents  the 
value  we  have  fixed  upon  corporations  that  have  already  "paid  a 
tax  to  the  State  Comptroller,  now  the  more  that  valuation  is 
increased,  the  less  it  makes  a  balance  for  the  State  to  collect  this 
general  State  tax  upon,  and  it  is  in  that  connection  we  may  have 
lost  something  for  the  State  to  assess  State  taxes  upon  directly 
than  it  is  upon  the  loss  of  a  total  valuation  in  the  State ;  do  you  see 
what  I  mean? 

Q.  Will  you  furnish  for  us  at  the  next  hearing  the  number 
of  persons  assessed  for  personal  estate?  A.  It  is  about  22,000 
outside  of  the  bank  shares,  and  that  is  about  twenty  odd  thousand. 

The  committee  then  went  into  executive  session. 

The  sergeant-at-arms  reported  that  he  had  conferred  with  Mr. 
Gilroy,  the  commissioner  of  public  works,  but  that  an  arrange- 
ment had  not  been  definitely  reached  as  to  the  assignment  of  a 
room  in  the  city  hall  for  the  future  meetings  of  the  committee. 


Mr.  Quigley  moved  that  the  stenographer  be  directed  to  fur- 
nish a  copy  after  each  hearing  of  the  minutes  taken  to  each 
member  of  the  committee  and  also  to  each  of  the  counsel. 

Carried. 

It  was  moved  that  when  the  committee  adjourn  it  be  to  meet 
again  on  Tuesday,  December  twentieth,  at  1.30  p.  m.,  at  a  place 
to  be  agreed  upon  hereafter. 

On  motion  the  meeting  adjourned. 


Meeting  of  Joint  Committee  on  Taxation. 

New  York,  December  20,  1892. 
Superior  Court,  Part  2. 

The  committee  met  pursuant  to  adjournment. 
The  meeting  was  called  to  order  by  the  chairman. 

Thomas  L.  Feitner,  being  recalled,  testified  as  follows: 
By  Mr.  Creamer. 

Q.  The  committee  requested  you  to  bring  certain  papers  at  the 
last  meeting;  have  you  broaght  them?  A.  Yes,  sir. 

Q.  The  first  request  was  in  relation  to  assessments  on  personal 
property;  what  was  the  assessment  in  1872?  A.  The  comparative 
statement  of  the  assessed  valuation  on  real  and  personal  estate, 
on  page  471  in  the  report  of  the  tax  commissioners  of  the  city 
of  New  York,  shows  that  in  1870  the  total  personal  then  was 
$305,317,000. 

Q.  What  did  that  include  at  that  time;  has  anything  covered 
by  that  assessment  been  since  exempted  by  law?  A.  I  don't 
remember  anything  that  has  been  exempted  specially  since  then; 
the  true  situation  is  this,  at  least  that  is  what  I  have  been 
informed;  of  course,  it  was  ten  years  and  over  after  that  that  I 
asked  the  department,  but  the  city  then  had  put  on  a  very  large 
number  of  individuals,  and  although  they  did  not  appear  and 
had  nothing  in  the  way  of  personal  property,  they  allowed  the 
record  to  go  against  them,  and  the  loss  to  the  city  was  large. 

Q.  The  loss?    A.  The  loss  to  the  city  was  very  large  because 


62 

they  were  not  able  to  collect  as  those  individuals  did  not  hj 
any  personal  property. 

Q  Was  it  larger  than  if  they  had  not  been  put  on  at  all?  A. 
Yes,  sir;  because  they  allowed  the  assessment  to  stand. 

Q.  How  did  the  city  lose?  A.  Because  they  were  not  able  to 
collect. 

Q.  Suppose  the  names  had  not  been  put  down?  A.  If  they  had 
not  been  put  down  then  the  assessed  valuation  would  have  been 
so  much  less  —  whatever  was  assessed  as  against  those  indi- 
viduals. 

Q.  What  was  it  the  next  year?  A.  Three  hundred  and  six 
million  dollars;  I  gave  the  round  millions  without  the  thousands. 

Q.  Your  answer  would  indicate  that  there  was  a  large  busi- 
ness in  the  office  of  the  counsel  for  the  collection  of  arrears  in 
the  tax;  does  the  record  show  that?  A.  I  understand  it  does. 

Q.  You  have  no  figures  on  that?    A.  No,  sir. 

Q.  Notwithstanding,  this  defect  in  the  enforcement  of  the  law 
was  apparent  from  the  manner  in  which  it  operated;  the  same 
amount  was  still  continued  in  1871?  A.  Yes,  sir;  and  1872. 

Q.  With  the  same  result?  A.  Yes,  sir;  and  1873;  then  they 
began  to  fall  off. 

Q.  What  was  the  assessment  in  1872?  A.  Three  hundred  and 
six  million  dollars  again;  about  the  same  amount;  and  1873  it  was 
1292,000,000;  then  it  began  to  fall  off. 

Q.  That  was  the  year  of  the  panic?  A.  Yes,  sir;  that  may 
account  for  it  partially. 

Q.  The  law  was  the  same  concerning  what  you  would  place 
on  the  assessment-rolls  of  personal  property  then  as  it  is  to-day, 
to  your  knowledge?  A.  Yes,  sir;  to  my  knowledge;  I  do  not 
remember  any  difference. 

Q.  No  difference?  A.  No,  sir;  I  think  we  were  acting  under 
the  laws  of  1851  —  the  general  provisions  of  that  law. 

Q.  What  was  the  assessment  on  personal  property  in  1891  — 
twenty  years  later?    A.  Three  hundred  and  twenty-one  million 
dollars. 

Q.  In  1890?    A.  Two  hundred  and  ninety-eight  million  dollars. 


63 

Q.  Less  than  it  was  twenty  years  previous?  A.  No;  it  was 
$305,000,000  in  1870;  $306,000,000  in  1871;  it  is  $323,000,000  now. 

Q.  T  am  speaking  of  3890;  what  was  it  in  1890,  twenty  years 
later  than  1870?  A.  $29<y  100.000;  it  was  down  to  $198,000,000 
in  1882;  in  1883  —  I  entered  the  department  in  May  after  the 
work  was  done  — it  was  $197,000,000;  in  1884  it  went  to 
$218,000,000;  then  it  went  back  to  $202,000,000;  in  1886  it  was 
$217.000,000;  in  1887  $253,000,000;  in  1888  $250,000,000;  in  1889 
$272.000,000;  in  1890  $298,000,000,  and  in  1891  $321,000,000. 

Q.  In  1892?    A.  Three  hundred  and  twenty-three  million  dollars. 

Q.  Then,  the  assessment  entered  this  year  is  about  $18,000,000 
larger  than  it  was  twenty  years  ago,  and  the  law  is  the  s.-niic  to 
your  knowledge?  A.  Yes,  sir;  as  far  as  I  remember;  I  do  not 
remember  any  amendment  to  it  of  any  account  to  affect  ic  one 
way  or  the  other. 

Mr.  Creamer. — -I  would  especially  call  the  attention  of  the 
committee  to  this  significant  fact,  that  the  commissioner  testi- 
fies that  under  the  same  law,  the  amount  assessed  in  1892  is 
almost  the  same  as  it  was  twenty  odd  years  ago  —  twenty-two 
years  ago. 

Q.  Now,  can  you  give  any  explanation  as  to  why  it  is  that, 
notwithstanding  the  natural  growth  of  the  wealth  of  this  city, 
which  is  admitted  by  all,  that  nevertheless  the  assessment-rolls 
do  not  keep  pace  with  the  progress  of  the  day?  A.  The  only 
reason  that  I  can  give  is  the  opportunities  given  by  the  law  in 
relation  to  the  creation  of  debts  for  the  purpose  of  evasion,  and 
opportunities  given  by  law  about  changing  of  securities. 

Q.  But  that  law  existed  in  1870?  A.  The  same  law  did,  but 
there  has  been  a  decision  of  the  Court  of  Appeals  since  which 
holds  that  a  debt  created  by  a  taxpayer  was  something  to  be 
allowed  without  the  right  of  inquiring  by  the  tax  commissioners, 
as  long  as  it  was  sworn  to  as  a  debt. 

Q.  How  recent  was  that  decision;  was  not  that  always  the 
law  without  decision  to  interpret  it?  A.  I  don't  think  the  com- 
missioners interpreted  it  in  that  way;  before  they  undertook  to 
inquire  as  to  the  debt,  and  they  do  even  now,  notwithstanding  the 


OF   TRB 

UNIVERSITY 


64 

Court  of  Appeals  decision  in  that  respect;  we  think  we  have  a 
right  to  inquire  as  to  the  nature  of  that  debt. 

Q.  Have  you  the  amount  assessed  on  real  estate  there  in  1870? 
A.  In  1870,  it  was  $742,000,000. 

Q.  In  1890?  A.  One  billion  three  hundred  and  ninety-eight 
million  dollars. 

Q.  Almost  doubling?    A.  Just  about;  yes,  sir;  almost  doubling. 

Q.  While  personal  decreased  between  those  periods  from  1870 
to  1890?  A.  Yes,  sir. 

Q.  How  do  you  account  for  the  neighboring  county  of  Kings 
that  from  1880  to  1890  doubled  the  amount  of  its  personal  assess- 
ments, while  New  York  has  remained  stationary,  under  the  same 
laws  and  the  same  decisions?  A.  I  can  not  account  for  that  in  any 
other  way  than  the  determination  of  the  department  here  to  try 
to  enforce  the  law,  and  in  the  enforcement  of  the  law  they  have 
compelled  some  corporations  to  go  to  Brooklyn. 

Q.  Have  you  known  of  any  cases  where  owing  to  the  tax  laws 
that  has  been  done?  A.  I  have  heard  of  many  cases  in  my 
experience. 

Q.  They  go  where  the  tax  rate  is  higher?  A.  They  go  where 
they,  as  far  as  personal  taxation  is  concerned,  get  on  for  less. 

Q.  Is  it  really  true  that  there  are  such  cases  called  to  your 
attention?  A.  Yes,  sir;  they  have  been  in  my  time;  it  was  only 
the  other  day  we  had  a  special  corporation  come  in;  the  attorney 
for  the  corporation  said  that  the  office  was  over  in  Brooklyn; 
their  stock,  I  believe,  was  $100,000,  and  we  were  given  to  under- 
stand that  the  assessment  over  there  would  be  considerably  less; 
we  told  him  we  had  nothing!  to  do  with  that  question;  that  we 
assessed  here  under  the  law;  he  could  do  as  he  pleased. 

Q.  When  they  move  their  business  there  you  can  not  reach 
that,  of  course?  A.  The  question  of  business  in  relation  to  cor- 
porations is  a  very  nice  question;  their  taxable  status  exists 
where  their  principal  office  is  under  their  certificate  of  incorpora- 
tion; the  courts  have  so  held;  in  some  cases  although  a  corpora- 
tion may  have  an  actual  business  office  some  other  place  yet  they 
are  taxable  at  the  office  where  the  certificate  designates  the 
principal  office. 


65 

Q.  How  did  you  say  the  personal  tax  rolls  are  now  made*  up 
year  after  year?  A.  The  assessment  is  made  by  the  deputy  who 
puts  in  the  whole  amount  of  the  capital,  so  far  as  corporations 
are  concerned. 

Q.  And  individuals?  A.  And  individuals,  as  high  as  in  his 
judgment  may  seem  proper  to  make  an  assessment  that  will  be 
equal,  and  what  their  personal  property  may  consist  of  taxable, 
and  then  corporations  file  a  report  of  their  condition  with  us, 
and  these  reports  the  commissioners  go  over  and  determine  the 
final  amount  of  assessment  upon  the  corporation,  giving  them 
their  legal  deductions,  such  as  real  estate,  whatever  they  may 
own,  and  non-taxable  assets. 

Q.  His  action  is  reviewed  where  complaint  is  made,  is  that  it; 
where  there  is  an  application  for  review,  those  are  the  cases 
where  you  inquire?  A.  Yes,  sir. 

Q.  Why  does  all  this  duty  devolve  on  one  deputy  for  the  entire 
county?  A.  As  a  matter  of  administration  we  think  it  is  the 
best  kind  of  administration  in  the  city. 

Q.  What  does  the  law  say  concerning  how  personal  property 
shall  be  assessed  in  the  county?  A.  It  shall  be  done  by  a  deputy 
who  shall  make  his  report. 

Q.  By  wards^  is  it?  A.  The  assessment  is  made  by  the  deputy 
under  the  designation  of  wards. 

Q.  Has  he  any  knowledge  of  what  is  transpiring  in  the  different 
wards  of  the  county  or  city  with  a  view  of  making  up  an  intelligent 
assessment-roll?  A.  In  some  respects  a  gjreat  deal  more  than 
anybody  else  may,  because  it  is  his  duty  to  make  investigations 
and  to  make  inquiries. 

Q.  Does  not  the  law  read  that  the  deputies  for  the  entire 
department  shall  make  up  the  assessment-roll  for  personal  as 
well  as  real  estate  in  their  respective  districts?  A.  So  they  do 
as  far  as  their  districts  are  concerned,  the  deputies  for  the  real 
estate  department  make  up  their  assessment  for  the  roll  and  the 
deputy  for  the  personal  makes  up  his. 

Q.  Is  there  a  deputy  for  the  personal  property  in  each  district? 

.  No,  sir. 

9 


66 

Q.'Does  not  the  law  require  that  the  same  person  shall  make 
up  the  personal?  A.  It  does  not;  the  courts  have  held  that  it 
does  not. 

Q.  Have  you  read  the  law  of  1892?    A.  Which  do  you  mean? 

Q.  On  the  question  of  taxes  as  to  how  assessment-rolls  shall  be 
made  up?  A  No;  I  do  not  know  that  I  can  say  I  have,  although 
I  have  looked  over  the  session  laws  of  1892,  but  I  don't  remember 
noticing  anything  of  that  kind. 

Q.  Now,  commissioner,  you  are  familiar  with  the  history  of 
the  tax  department  I  have  no  doubt?  A.  Somewhat. 

Q.  Have  the  personal  tax  rolls  always  been  made  up  in  this 
manner  by  single  deputy?  A.  They  have  since  I  have  been  con- 
nected with  it,  and  it  has  been  for  a  number  of  years  before  that; 
how  long  before  that  I  do  not  know,  or  what  the  change  was 
previous. 

Q.  How  many  deputies  have  you  in  the  office  now  for  the 
assessing  of  property  real  and  personal?  A.  About  thirteen,  1 
think,  altogether. 

Q.  Have  you  any  knowledge  of  the  manner  of  assessing  and 
the  conducting  of  business  in  the  office  say  one-quarter  of  a 
century  ago?  A.  I  understood  that  a  quarter  of  a  century  ago 
the  deputies  of  each  district  did  make  the  personal  assessments. 

Q.  Or  wards?    A.  Or  wards. 

Q.  At  one  period  they  were  all  elected  by  the  people  by  wards  — 
the  ward  assessors  —  were  they  not?  A.  So  I  understood. 

Q.  Thirty  years  ago  we  had  in  this  county  an  assessor  for 
every  ward  in  the  city,  twenty -two  wards,  thirty  years  ago?  A. 
So  I  believe. 

Q.  To-day  there  are  but  thirteen  in  the  city;  what  do  you 
think  in  reference  to  that  deficiency?  A.  I  think  there  are  oppor- 
tunities for  improvement  in  the  way  of  the  number  of  deputies; 
the  districts  are  very  large,  and  by  the  increase  of  deputies  they 
would  undoubtedly  be  better  work  in  a  general  sense,  although 
I  think  the  work  is  very  fair,  take  it  all  in  all;  the  distances  in 
certain  districts,  as  I  say,  are  very  large,  and  there  is  room  for 
improvement  by  making  them  smaller  and  giving  the  deputies 
more  time  to  fullv  consider  the  valuations  in  districts. 


67 

Q.  Do  you  think  the  salaries  of  your  deputies  are  appropriate 
compensation  considering  the  necessary  qualifications  to  fill  such 
a  place?  A.  I  do  not;  I  have  always  been  in  favor  of  increasing 
them. 

Q.  Then  you  think  the  number  not  large  enough  and  the  sala- 
ries out  of  proportion?  A.  Yes,  sir. 

Q.  To  perform  this  most  responsible  duty  of  assessing  property 
values  in  this  county?  A.  Yes,  sir. 

By  the  Chairman. 

Q.  How  much  are  they  paid  now?  A.  Twenty-seven  hundred 
dollars;  that  is,  the  deputies  for  real  estate,  and  the  deputies  for 
personal  property  get  $3,500. 

By  Mr.  Creamer. 

Q.  Are  you  familiar  with  the  manner  of  conducting  tne  tax 
ofiice  in  other  large  cities,  say  Boston,  Philadelphia  or  Kings 
county?  A.  No,  sir;  I  do  not  remember;  I  have  read  their 
reports  off  and  on  years  ago  when  I  first  entered  the  department, 
but  I  don't  remember  exactly  now  how  they  are  regulated. 

Q.  Are  you  aware  of  any  other  cities  that  employ  a  larger  staff 
and  give  them  a  much  larger  salary  than  is  given  in  this  county? 
A.  I  am  not  aware  of  it  now. 

Q.  Are  you  familiar  with  the  amount  assessed  on  tax-rolls  in 
Boston,  Mass.?  A.  I  could  not  give  you  the  figures  now,  but  I 
was  three  or  four  years  ago. 

Q.  What  is  your  recollection,  so  as  to  make  a  comparison  as 
to  how  it  works,  take  personal?  A.  I  could  not  say. 

Q.  You  have  no  recollection  about  any  other  city  or  state? 
A.  I  don't  remember  the  figures;  I  remember  sending  for  reports 
from  those  different  cities  and  different  cities  of  this  State,  to 
Philadelphia,  etc. —  getting  their  figures  —  may  be  five  or  six 
years  ago,  but  what  the  figures  are  now  I  wouldn't  be  able  to 
say. 

Q.  Now,  as  regards  your  personal  tax  bureau,  don't  you  think 
it  is  entirely  too  much  work  to  impose  on  one  deputy  at  a  salary 


68 

of  |2,700  a  year,  to  assess  property  admitted  to  be  worth 
$1,700,000,000  personal,  in  this  county?  A.  That  deputy  gets 
$3,500. 

Q.  Even  at  that;  don't  you  think  the  amount  of  labor  is  too 
much;  how  many  names  are  on  the  personal  tax  book  this  year, 
including  corporations,  bank  shares  and  individuals?  A,  I  think 
it  is  about  50,000  altogether,  taking  them  all,  shareholders  of 
banks,  etc. 

Q.  Have  you  any  record  there?  A.  There  is  a  record  here,  yes, 
sir;  those  are  the  figures  for  1890;  the  net  is  13,809  on  personal 
book,  and  20,977  on  shareholders  of  banks,  and  there  can  be  added 
to  that  13,000  more  sworn  off  on  personal  book  and  about  three 
or  four  thousand  on  shareholders  of  banks. 

Q.  And  then  you  have  altogether  of  personal  and  shareholders 
how  many  thousand?  A.  About  50,000,  and  corporations  in  addi- 
tion, about  3,000. 

Q.  Fifty-three  thousand?    A.  Yes,  sir. 

Q.  Do  you  remember  how  many  names  there  are  on  the  real 
estate  books?  A.  No;  we  do  not  assess  according  to  names;  it 
is  the  piece  of  property  we  assess. 

Q.  Does  not  the  law  require  it;  why  can  not  you  have  it  done? 
A.  I  know  of  no  reason  why  it  should  not  be  done. 

Q.  Does  not  the  law  say  it  should  be  done?  A.  Not  in  this 
county. 

Q.  You  will  find  by  reference  to  the  law  it  clearly  so  states? 
A.  Under  the  general  statute  we  would  assess  by  blocks  and 
ward  numbers. 

Q.  Have  you  read  the  laws  of  1892  concerning  that  subject? 
A.  I  have  not;  we  were  speaking  about  it  a  week  ago. 

Q.  You  have  not  read  the  law  of  1892?    A.  No,  sir. 

Q.  You  will  find  that  that  requires  that  the  names  should  be 
entered,  and  as  you  say  you  do  not  see  any  good  reason  why  the 
names  should  not?  A.  It  has  always  been  something  that  I 
tried  to  encourage,  having  the  correct  names  against  every  piece 
of  property. 

Q.  Why  is  it  not  done;  for  a  lack  of  appropriation?  A.  Well, 
no;  but  the  ownership  changes,  and  as  it  didn't  affect  the  amount 


69 

of  the  assessment,  the  department  has  got  into  a  routine  of  not 
changing  the  name  unless  the  proper  owner  came  in  and  requested 
it;  in  that  way  the  name  was  changed;  of  course,  that  is  very  often 
done. 

Q.  You  take  business  property  down  town,  say  below  Chambers 
street  here;  property  does  not  change  hands  so  often  but  what  a 
few  clerks  could  track  of  it?  A.  I  think  it  is  an  advisable  thing 
to  do;  I  have  encouraged  it  by  calling  the  attention  of  the  depu- 
ties off  and  on. 

Q.  My  questions  are  based  upon  the  theory  that  the  staff  of 
your  office  does  not  lack  efficiency  near  as  much  as  it  does  numDers, 
and  that  a  change  in  that  respect  is  necessary  before  good  results 
can  be  expected  from  any  movement  made  towards  reaching  per- 
sonal property?  A.  I  think  the  department  has  been  unanimous 
ever  since  I  have  been  in  it  that  an  increase  of  numbers  and  of 
salary  would  be  more  beneficial  to  the  department,  but  the  diffi- 
culty has  been  that  the  city  government  has  been  run  on  a  very 
economical  basis,  and  whenever  we  speak  of  increasing  we  are 
met  by  the  board  of  estimate  and  apportionment  desiring  us  to 
keep  as  low  as  possible  in  our  expenditures. 

Q.  Then  all  this  cry  concerning  the  impossibility  of  reaching 
personal  property  in  order  to  assess  the  owners  rests  on  this  one 
deputy  principally,  whose  duty  it  is  to  assess  it  in  accordance  with 
whatever  information  is  writhin  its  reach,  and  that  it  is  what  the 
local  government  relies  on  for  the  purpose  of  carrying  out  the 
law  concerning  the  assessment  of  personal  property,  including 
whatever  they  assess  against  corporations,  banks,  etc.?  A.  Yes, 
sir;  I  may  say  as  far  as  individual  assessment  is  concerned,  that 
is  held  altogether  in  the  hands  of  the  deputy,  because  so  far  as 
corporations  are  concerned  the  assessment  is  put  so  high  that  they 
are  compelled  to  make  a  return,  and  those  returns  are  in  the 
nature  of  applications  for  reduction,  and  passed  upon  by  the  com- 
missioners themselves. 

Q.  You  stated  last  week  that  you  thought  the  imposing  of  a 
State  tax  of  one  mill  on  bonds  and  mortgages  in  this  State  would 
go  far  toward  paying  the  State  expenses?  A.  Yes,  sir. 


70 

Q.  Have  you  figured  on  that  to  see  how  much  you  could  reach 
by  assessing  bonds  and  mortgages  that  amount?  A.  I  have  not; 
but  I  am  satisfied  from  my  experience  that  bonds  and  mortgages 
all  over  this  State  will  be  equal,  if  not  more  than  the  assessed 
value  of  real  estate;  then  consider  the  fact  that  a  great  many 
pieces  of  property  have  no  mortgages  on  them  at  all,  and  in 
addition  to  that  it  would  take  in  bonds  and  mortgages  of 
corporations. 

Q.  How  inuch  assessment  is  there  on  personal  property  in  the 
State  this  year?  A.  I  understand  the  rate  to  be  one  and  ninety- 
eight  hundredths. 

Mr.  Creamer. —  Mr.  Chairman,  I  want  to  call  the  committee's 
attention  to  the  fact  that  if  there  was  any  change  in  the  law  it 
would  have  to  be  a  much  larger  sum  than  one  mill,  because  one 
mill  would  only  produce,  according  to  the  entire  amount  now  in 
the  tax  books,  about  $300,000  in  this  county,  and  in  the  entire 
State  not  over  $500,000,  and  if  we  deduct  from  that  the  amount 
held  by  corporations  in  bank  shares,  of  course,  the  amount  would 
be  insignificant. 

The  witness. —  I  am  not  supposing  that  it  would  be  sufficient  to 
raise  that  tax.  I  have  also  given  you  estates.  I  wish  to  express  here 
the  principle  that  I  have  thought  of  in  mind  in  relation  to  estates. 
The  law  compels  an  executor  or  trustee  to  invest  in  certain  securi- 
ties for  the  protection  of  that  estate.  Now,  why  should  the  law 
put  a  tax  upon  the  capital  in  the  hands  of  executors  and  trustees, 
restricting  them  in  one  sense  and  making  them  pay  equal  to  any 
other  personal  property  in  the  hands  of  individuals  who  can  invest 
it  and  make  considerably  more  out  of  it?  And  upon  that  theory, 
1  say  that  ihe  State  ought  to  take  estates  and  assess  them  at  a 
small  ratio  of  percentage  of  value  and  exempt  them  for  local 
purpose.  As  between  those  two  I  am  satisfied  so  far  as  my  experi- 
ence and  general  judgment  goes  with  those  small  additions  that 
you  now  already  have  in  expenditures  as  the  collateral  inheritance 
tax,  an  this  small  lax  upon  corporations  for  State  purposes,  will 
raise  the  whole  of  vonr  State  tax. 


71 

By  Mr.  Coggeshall. 

Q.  How  much  do  you  estimate  the  aggregate  value  of  the  bonds 
and  mortgages  of  the  State  to  be?  A.  I  want  to  say  here  that 
my  general  judgment  is  that  I  am  satisfied  that  the  amount  of 
bonds  and  mortgages  upon  lands  in  this  State  is  equal  to  the 
amount  of  values  of  land  for  taxable  purposes. 

Q,  How  much  is  that  in  round  numbers? 

Mr.  Creamer.— For  1891,  3,931,000,000. 

Q.  Is  it  not  a  fact  that  it  is  very  difficult  to  reach  bonds  and 
mortgages?  A.  The  question  is  then  as  to  the  system  of  doing 
it;  I  might  give  you  the  line  of  thought  to  adopt  a  system,  and 
to  that  line  of  thought  I  think  a  system  can  be  adopted;  for 
instance,  one  of  the  thoughts  in  my  mind  is  that  the  register 
when  the  mortgage  is  filed  could  collect  the  first  year's  tax,  sending 
the  amount  of  the  bond  and  mortgage  and  the  individual  either 
to  your  State  Comptroller  or  a  special  department,  if  you  are 
going  into  this  system  for  the  purpose  of  collecting  State  taxes, 
such  as  the  board  of  equalization,  who  may  determine  the  taxes 
and  assessments,  if  they  please,  to  be  collected  under  this  new 
system;  that  was  one  line  of  thought,  then  having  received  the 
name  and  so  forth;  make  it  a  lien  upon  that  mortgage,  so  far  as 
the  disposal  of  that  mortgage  is  concerned,  this  shows  whether 
every  year's  tax  is  paid  regularly,  and  it  can  not  be  satisfied  of 
record  until  the  tax  is  paid. 

By  the  Chairman. 

Q.  Do  you  suggest  the  continuation  of  the  assessment  on  the  full 
value  of  real  estate  and  then  also  tax  the  mortgage?  A.  Yes,  sir; 
that  is  capital  invested  in  land. 

Q.  Wouldn't  yon  consider  that  a  double  tax?  A.  I  would 
not,  and  I  do  not  and  never  did. 

Q.  The  owner  of  the  fee  would  be  paying  a  tax  on  the  full 
value  of  the  land,  and  then  the  mortgagee  would  be  paying  a 
tax  also  on  the  amount  of  money  invested?  A.  Secured  by  the 
land;  yes,  sir;  suppose  that  mortgage  was  paid  off,  say  it  was 


72 

a  $100,000  mortgage;  that  would  be  taxable  in  some  other  way 
so  far  as  it  would  have  to  be  invested  in  taxable  assets;  it  would 
be  taxable  some  other  way. 

By  Mr.  Coggeshall. 

Q.  What  do  you  think  of  making  personal  property  liable  to 
taxation  for  its  full  amount,  without  any  deductions  on  account 
of  alleged  indebtedness,  the  same  as  real  estate  is  now  assessed? 
A.  Well,  my  thought  is  that  in  the  present  system  von  ought  to 
allow  the  deduction  of  indebtedness. 

Q.  But,  as  to  real  estate  as  well  as  personal  property?  A.  No; 
if  you  get  into  that  condition  of  affairs,  you  will  find  that  you 
will  never  be  able  to  raise  any  taxes  for  local  State  purposes. 

Q.  Why  should  a  m:m  who  has  $100,000  of  personal  property 
that  is  yielding  a  good  income  be  pemiitted  to  go  before  the  assess- 
ors and  on  a  state  of  facts  which  he  claims  be  permitted  to  deduct 
say  |75,000  of  that  amount  and  the  man  who  owns  real  estate, 
and  there  are  on  that  real  estate  mortgages  for  the  same  amount; 
for  instance,  he  owns  f  100,000  of  real  estate,  and  it  is  mortgaged 
for  $75,000,  why  should  he  be  required  to  pay  taxes  upon  the 
full  amount  without  any  deductions,  while  the  man  who  owns 
the  personal  property  is  permitted  to  deduct  f 75,000?  A.  Keal 
estate  security  may  be  put  upon  anything  else;  it  may  be  on 
chattels;  it  would  make  no  difference;  the  bond  is  the  capital 
which  is  the  thing  that  is  taxable;  because  a  man  happens  to 
secure  his  indebtedness  don't  make  the  real  estate  man  pay  that 
debt. 

Q.  But  you  make  the  real  estate  owner  pay  taxes  to  the  full 
value  of  the  real  estate  without  any  deductions,  whereas  the  man 
who  owns  personal  property  gets  a  deduction?  A.  I  suppose 
the  theory  of  it  all  is  this,  that  the  State  has  satisfied  itself  that 
it  could  not  collect  its  taxes  with  a  certainty  except  by  taking 
real  estate  without  any  deduction  for  debts,  because  they  say 
we  will  assess  the  individual  that  owns  personal  property  upon 
that  which  he  actually  owns  and  nothing  else. 

Q.  But  the  same  rule  does  not  obtain  as  to  real  estate?  A. 
No,  sir. 


73 

By  Mr.  Guenther. 

Q.  Isn't  it  because  real  property  is  considered  better  than 
personal  that  they  draw  that  line?  A.  I  have  always  thought 
it  was  because  of  the  certainty;  you  must  have  as  much  certainty 
as  you  can  get  at  and  real  estate  is  certainty. 

By  Mr.  Coggeshall. 

Q.  It  is  an  absolute  fact,  however,  that  a  large  proportion  of 
the  agricultural  lands  of  the  State  are  far  from  being  profitable 
and  the  average  farmer  suffers?  A.  That  is  one  of  the  reasons 
why  I  suggest  that  the  rate  should  be  so  low  on  bonds  and  mort- 
gages so  that  it  would  not  affect,  as  it  naturally  would,  if  you 
would  raise  it,  the  question  of  interest  for  the  farmers  or  for 
anybody  else;  one  mill  or  ten  dollars  upon  ten  thousand  would 
be  such  a  low  rate  that  it  would  not  frighten  capital  from  coming 
into  the  State,  nor  would  it  affect  the  interest  on  the  parUof  the 
lender. 

By  the  Chairman. 

Q.  If  I  understand  you  right,  your  scheme  would  not  give  the 
farmer  any  relief  because  he  would  continue  to  pay  on  the  full 
value  just  the  same;  you  add  a  tax  to  the  mortgagee,  who  may 
be  a  banker  or  business  man;  that  would  be  an  additional  burden 
to  him,  but  it  don't  give  any  relief  to  the  farmer.  A.  No  more 
than  the  State  tax  would  be  all  raised  that  way. 

By  Mr.  Gifford. 

Q.  Is  it  not  a  fact  that  State  taxes  are  but  a  drop  in  the  bucket 
compared  with,  the  local  taxes  in  those  matters,  and  is  it  not  jus* 
that  the  owner  of  real  estate  should  only  pay  upon  ownership  the 
same  as  the  owner  of  personal  property  and  nothing  more?  A. 
That  is  my  point;  then  it  relieves  the  people  of  this  State  so  far 
as  regulating  the  system  of  taxation  in  the  respective  localities, 
where  that  system  don't  apply,  and  it  makes  the  people  look  to 
the  taxation  in  their  immediate  localities,  and  if  they  are  paying 
more  taxes  there  than  they  ought  to,  then  they  ought  to  take 
charge  of  the  people  responsible  for  it. 

10 


74 

Q.  Doesn't  a  real  estate  owner  pay  as  much  after  the  mortgage 
is  placed  upon  the  real  estate  property  as  before?  A.  Yes,  sir. 

Q.  He  has  contracted  a  new  debt>  has  he  not?    A.  Yes,  sir. 

Q.  But  the  value  of  the  real  estate,  at  least  the  amount  of  the 
real  estate,  is  not  diminished  any  by  the  fact  that  the  lien  is  put 
on  it?  A.  Not  at  all. 

Q.  Then  after  the  lien  is  put  on  the  real  estate  we  have  a 
certain  amount  of  real  estate  and  a  certain  amount  of  personal 
property,  which  is  a  debt  owed  to  somebody?  A.  Yes,  sir;  and  it 
could  be  made  on  chattels  as  well  as  on  real  estate. 

Q.  Keal  estate  is  the  security  for  the  bond?    A.  Yes,  sir. 

By  Mr.  Coggeshall. 

Q.  Bonds  as  a  matter  of  fact,  while  they  are  an  evidence  of 
indebtedness,  as  a  matter  of  fact,  they  represent  and  are  really 
so  much  money?  A.  Yes,  sir. 

Q.  And  upon  those  the  parties  owning  them,  in  your  judgment, 
should  be  assessed?  A.  Yes,  sir. 

Q.  And  under  our  present  system  we  are  not  able  to  reach 
them  as  they  should  be  reached;  now,  can  you  suggest  any  legis- 
lation that  will  reach  those  bonds  and  mortgages?  A.  By  assess- 
ing them  and  not  allowing  any  deductions  for  debts,  no  matter 
in  whose  hands  they  are,  no  matter  whether  a  resident  or  non- 
resident. 

Q.  We  have  now  a  law  which  undertakes  to  reach  them  but  does 
not?  A.  No,  sir;  now  you  allow  a  deduction  for  debts. 

Q.  That  you  would  remove?  A.  So  far  as  such  capital  is  con- 
cerned, then  you  are  assessing  only  two  or  three  lines  of  capital 
in  which  you  do  not  propose  to  allow  any  debts;  determine  first 
whether  or  not  you  shall  allow  any  deduction  in  collections  on 
personal  property,  or  do  not  assess  personal  property  at  all. 

By  Mr.  Creamer. 

Q.  Are  you  familiar  with  the  amount  of  personal  property 
entering  this  port  in  the  shape  of  imports  year  after  year?  A.  1 
had  the  figures  before  me. 

Q.  Say  in  round  numbers  f800,000,000  annually,  personal 
property  imported  to  this  country,  principally  entering  this  port, 


75 

or  two-tMrds  of  it  at  least;  are  you  familiar  with,  the  sum  raked 
tariff  tax  ranging  since  the  origin  of  the  country  from  ten  per 
cent  tariff  up,  as  high  as  sixty  —  the  amount  the  national  govern- 
ment collects  on  that  f  800,000,000?  A.  I  can  not  give  you  figures 
on  that. 

Q.  We  will  say  it  is  $200,000,000;  why  can  not  laws  be  passed 
by  the  State  of  New  York  to  collect  a  much  smaller  percentage  of 
the  value  of  personal  property,  just  as  well  as  the  government  of 
the  United  States  have  passed  laws  to  reach  the  same;  why  can 
not  the  State  of  New  York  pass  a  law  that  will  reach  personal 
property?  A.  That  practically  comes  down  to  a  listing  system, 
because  that  is  made  upon  an  invoice  of  valuation. 

Q.  A  listing  system?     A.  Yes,  sir. 

Q.  Not  absolutely;  you  have  public  records  here  which  if  con- 
sulted would  enlighten  your  office?  A.  You  are  comparing  one 
line  of  administration  to  another;  as  I  understand,  the  taxes 
raised  by  the  general  government  are  based  upon  the  invoice  by 
the  customs  officers,  and  that  is  practically  a  listed  system,  is  it 
not? 

Q.  Yes;  there  is  a  listing  system  of  nearly  all  the  mortgages 
made  in  this  State,  and  also  there  is  a  law  requiring  all  corpo- 
rations to  make  annual  reports,  is  there  not?  A.  Yes,  sir. 

Q.  That  would  cover  the  same  ground  almost,  would  it  not? 
A.  But  when  you  find  an  individual  that  owns  a  mortgage  he 
has  gone  and  prepared  himself  for  that  assessment  by  contract- 
ing debts,  and  comes  in  here  and  swears  it  off,  and  the  man  who 
owres  the  mortgage,  he  comes  in  and  swears  it  off  on  the  other 
personal  property  that  he  may  own,  because  of  his  indebtedness 
on  that  bond  and  mortgage;  as  an  illustration,  I  am  informed  that 
a  very  large  business  house  in  the  city  of  New  York  went  into 
the  purchase  of  real  estate  and  bought  a  very  large  piece  of 
property  on  Broadway;  they  put  in  $50,000  capital,  and  raised  a 
mortgage  of  $150,000  on  their  building,  and  swore  off  on  their 
capital  tax  on  account  of  their  indebtedness  on  bond  and  mort- 
gage; you  see  how  that  works  in  that  case;  that  is  all  valuable 
information  coming  in  our  system  of  taxation  in  the  city  of  New 
York. 


76 

By  Mr.  Creamer. 

Q.  Coming  back  to  imports,  a  great  part  of  it  is  located  in 
this  city,  and  the  inquiry  is  natural  why  it  is  not  taxed  when  it 
enters  the  port;  we  know  what  it  is  in  part  by  what  the  customs 
records  show,  if  at  least  the  same  proportion  was  assessed,  there 
would  be  a  much  better  showing  than  there  is  to-day?  A.  I 
suppose  you  are  aware  that  so  far  as  any  goods  coming  from  the 
other  side  are  concerned,  unless  they  are  changed* as  to  their 
condition,  they  are  exempt  from  taxation  under  our  national 
laws;  that  is  to  say,  goods  in  original  packages  are  all  exempt, 
but  if  they  change  their  situation,  that  is  to  say,  become  partially 
broken,  then  they  are  liable. 

Q.  Was  there  ever  a  case  when  you  were  informed  that  they 
did  break  them  open?  A.  Yes,  sir;  many. 

Q.  They  always  inform  you?  A.  No,  sir;  we  have  them  swear 
to  it;  we  assess  them  upon  their  capital  invested  in  that  business, 
and  they  say  that  their  capital  is  invested  so  much  in  goods  in 
original  packages,  so  much  in  broken  packages,  so  much  in  bank, 
etc. —  give  a  statement  in  that  way  upon  inquiries  that  we  make 
of  them,  and  then  we  strike  a  balance  allowing  them  the  deduc- 
tions that  the  law  allows. 

By  the  Chairman. 

Q.  That  building  that  you  refer  to  on  Broadway,  was  that  an 
actual  incident  or  were  you  just  referring  to  that  as  an  illus- 
tration? A.  I  was  informed  some  time  ago  it  was  an  actual 
incident. 

Q.  You  say  they  invested  f  50,000  in  land  and  then  borrowed 
f  150,000  and  put  it  in  a  building?  A.  Yes,  sir. 

Q.  And  then  they  used  that  indebtedness  on  the  land  and 
building  as  an  offset  against  their  personal  property?  A.  Yes, 
sir. 

Q.  Can  you  tell  the  committee  what  that  laud  and  building 
was  assessed  for?  A.  I  have  not  any  particular  land  or  build- 
ing in  my  mind,  or  any  particular  firm  in  my  mind  now,  but  I 
was  informed  that  was  don»*. 

Q.  You  simply  referred  to  that  as  one  of  the  methods  used  to 
escape  taxation?  A.  Yes,  sir;  on  personal  property;  that  is  all. 


77 

By  Mr.  Creamer. 

Q.  Come  to  the  corporation  tax;  are  you  familiar  with  the 
workings  of  that  and  the  reports?  A.  Somewhat. 

Q.  The  amount  collected  in  our  State  last  year  was  about  how 
much?  A.  In  the  whole  State  on  corporations? 

Q.  Yes,  sir.    A.  A  little  over  $1,000,000  under  the  act  of  1880. 

Q.  Are  you  familiar  with  the  operations  of  a  similar  tax  law 
in  other  States,  Pennsylvania,  for  instance?  A.  I  know  there 
is  such  a  law  in  existence,  but  as  to  how  it  operates  I  don't  know ; 
I  understand  it  is  very  favorable. 

Q.  It  is  stated  that  it  is  close  to  f  5,000,000;  can  not  the  same 
law  apply  in  our  State  without  detriment  to  commerce  or  manu- 
factures or  business  generally,  if  it  operates  and  works  in  the 
State  of  Pennsylvania?  A.  I  suppose  it  could;  I  don't  know  of 
any  reason  why  it  should  not  operate;  the  only  question  ?>etween 
us  and  them  is  this,  I  think;  there  they  exempt  entirely  from 
local  taxation  their  corporations,  while  we  assess  them  for  State 
purposes  and  leave  them  still  liable  for  local  purposes. 

Q.  They  are  liable,  but  not  taxed?  A.  We  tax  them  here  in 
the  city. 

Q.  We  know  that;  but  owing  to  the  looseness  of  the  law  they 
are  not  reached?  A.  No,  sir. 

Q.  Can  you  tell  the  committee  as  to  the  working  of  the  inheri- 
tance tax,  whether  it  should  be  increased  or  decreased;  you  come 
into  contact  with  the  law  of  the  State?  A.  Yes,  sir;  but  :is  to 
how  it  operates  so  far  as  the  inheritance  tax  is  concerned,  or  that 
act  taxing  corporations  upon  their  franchise,  the  surrogate  and 
city  comptroller  would  be  able  to  tell  you  better  in  relation  to 
those;  we  don't  undertake  to  say  anything  about  the  operation 
of  those  because  we  find  no  objection  to  those;  nothing  has  been 
said  against  them  so  far  as  I  have  ever  head  on  the  part  of  any- 
body coming  in  and  being  reassessed  for  local  purposes  before  us; 
I  am  not  disposed  to  favor  a  line  of  thought  that  corporation! 
should  be  entirely  assessed  by  the  State,  and  free  from  local  taxa- 


78 

tion,  because  there  are  many  corporations  that  are  entirely  local, 
and  should  be  assessed  entirely  by  the  local  authorities;  for 
instance,  why  should  the  elevated  railroad  be  assessed  by  the 
State  when  their  whole  revenue  is  derived  in  the  city  of  New  York, 
and  their  franchise  is  entirely  in  the  city  of  New  York,  and  so  on 
with  other  corporations  that  are  entirely  local? 

Q.  As  a  financial  officer  of  the  city  government,  what  is  your 
judgment  concerning  the  increase  or  decrease  in  the  inheri- 
tance tax  now  collected  by  the  State  as  suggested  by  the  comp- 
troller recently;  light  is  needed  on  that  subject  in  view  of  legis- 
lation for  the  future;  you  meet  ten  thousand  people  a  year  in 
your  department,  taxpayers  and  non-taxpayers?  A.  I  am  not 
disposed  to  favor  any  inequality  in  the  law  so  far  as  the  rate  of 
taxation  is  concerned  upon  any  individual's  property,  no  matter 
whether  he  is  rich  or  poor,  or  to  make  an  exception  by  adopting 
any  such  rule  as  one  per  cent  on  $100,000,  two  per  cent  on 
$200,000,  and  so  on;  that  creates  inequality  by  law. 

Q.  It  is  already  in  existence?  A.  I  know;  because  a  man  hap- 
pens to  be  wealthy,  that  is  no  reason  why  he  should  pay  at  a 
greater  rate  for  the  protection  of  his  property  than  any  other  man. 

Q.  You  don't  believe  in  increasing  the  amount  beyond  the  pres- 
ent figure?  A.  I  can  not  say  as  to  whether  the  rate  now  fixed 
on  the  collateral  inheritance  tax  is  sufficient  or  not. 

By  the  Chairman. 

Q.  "You  believe  that  the  rate  ought  to  be  uniform  without 
regard  to  the  man?  A.  Yes,  sir. 

By  Mr.  Creamer. 

Q.  Now,  as  regards  the  amount  exempt,  $10,000  in  one  case, 
and  $500  in  the  collateral  inheritance,  what  is  your  opinion  of 
that?  A.  I  think  that  is  fair  enough.  II 

By  Mr.  Coggeshall. 

Q.  Should  that  be  deducted  from  the  estate  originally,  or  from 
the  amount  coming  to  the  heirs;  what  is  your  opinion  with  refer- 


79 

ence  to  that?  A.  At  present,  under  the  inheritance  tax  laws, 
lineal  descendants  are  not  taxable  to  the  amount  of  $10,000,  and 
over  that  they  are  taxable,  whether  it  is  real  or  personal  —  no; 
only  on  personalty,  I  believe;  now,  your  question  is  what? 

Q.  As  to  whether  the  amount  of  tax  should  be  taken  from  the 
estate  itself  or  from  the  respective  shares  coming  to  the  heirs  in 
either  case,  either  the  lineal  inheritance  law,  or  the  collateral 
inheritance  tax?  A.  It  seems  to  me  it  would  be  more  favorable 
as  it  is  now,  taken  from  the  legatees  or  heirs,  whoever  is  the 
one  entitled  to  it,  because  it  might  create  a  burden  by  taking 
it  from  the  general  estate  upon  somebody  that  would  not  desire 
to  be  taxed;  it  would  affect  the  interest  on  $10,000  that  you 
practically  exempt  by  taking  it  from  the  whole  estate. 

By  the  Chairman. 

Q.  You  think  the  beneficiary  ought  to  pay  it>?  A.  Yes,  sir;  it 
makes  it  more  satisfactory ;  the  beneficiary  is  always  willing  to 
pay,  while  the  estate  might  very  much  object  as  a  whole. 

By  Mr.  Coggeshall. 

Q.  You  think  the  amount  of  $500  is  sufficient,  do  you ;  you  would 
not  increase  the  amount  of  the  collateral  inheritance  exemption? 
A.  I  think  that  is  very  small;  I  would  be  inclined  to  increase  on 
personal  property  to  $1,000;  that  is  about  how  we  feel  in  the  city; 
£1,000  don't  do  much  more  than  bury  a  man  respectably  nowadays. 

By  Mr.  Creamer. 

Q.  What  is  your  judgment  concerning  an  income  tax  in  this 
State  similar  to  that  prevailing  in  other  States  on  sums  say  above 
£10,000  a  year  as  a  means  of  creating  revenue  ?  A.  I  think  an 
income  tax  as  a  system  would  produce  more  beneficial  results  than 
our  present  system,  but  I  think  it  is  a  very  objectionable  system. 

Q.  Take  it  separately,  leaving  existing  tax  laws  just  as  they  are 
and  having  on  income  above  $10,000  a  year  a  tax,  what  is  your 
opinion?  A.  I  am  not  inclined  to  favor  an  income  tax. 

Q.  Why?  •  A.  I  think  it  is  generally  objectionable  to  the  people, 
ind  generally  objectionable  to  good  government,  because  it  creates 


80 

as  much  inequality  in  that  way  as  you  do  under  the  present  sys- 
tem; it  gives  people  opportunities  to  do  that  which  they  ought  not 
to  do,  although  I  am  not  one  that  believes  in  a  great  amount  of 
perjury  going  on  in  relation  to  this  or  any  taxation  system,  yet 
people  can;  whenever  you  fix  a  definite  time  for  the  purpose  of 
raising  taxes,  you  will  find  that  the  people  will  always  regulate 
their  affairs  for  that  definite  time. 

By  the  Chairman. 

Q.  You  think  that  such  a  law  would  invite  evasion  of  it?  A.  I 
think  it  would  in  time;  it  might  not  for  one  or  two  years. 

Q.  I  had  an  Utopian  idea  at  one  time  in  connection  with  this 
system  of  taxation,  and  that  was  to  allow  the  tax  commissioners; 
have  three  systems  adopted  by  the  law,  your  present  system,  your 
listing  system  and  your  income  system,  and  give  the  tax  comitjis- 
sioners  the  right  to  initiate,  without  their  knowledge  as  to  \vhich 
system  was  to  be  initiated,  on  the  second  Monday  of  January,  either 
one  of  those  systems,  so  that  they  would  not  be  prepared  to  over- 
come the  difficulties  in  relation  to  the  situation.  A.  I  have  often 
thought  of  that  as  an  idea,  but  I  have  never  thought  well  enough 
of  it  to  recommend  it  to  anybody;  but  to  capture  personal  prop- 
erty which  is  so  shifting,  to  capture  the  individual  who  is  liable  to 
change,  those  two  elements,  with  the  element  of  indebtedness  enter- 
ing into  the  whole  of  it,  is  such  that  it  is  next  to  impossible  to  be 
able  to  obtain  a  tax  upon  personal  property. 

By  Mr.  Creamer. 

Q.  Have  you  furnished  the  committee  with  those  statements 
concerning  the  returns  made  by  certain  corporations?  A.  I  have  a 
number  of  statements  here,  but  I  want  to  call  your  attention 
to  this  while  you  are  on  the  subject,  and  which  is  quite  interesting 
to  me,  and  that  is  that  our  department  have  been  disposed  to  try 
to  equalize  valuations  in  relation  to  corporations,  so  far  as  those 
corporations  were  competitive;  take,  for  instance,  the  capital  of 
a  corporation  that  had  a  franchise,  it  would  not  compare  to  a 
manufacturing  corporation,  we  would  take  as  a  basis  of  value 


UNIVERSITY 

81  |RH\^ 

for  a  franchise  corporation  a  five  or  six  per  cent  dividend  ais  a 
par  value,  while  a  manufacturing  corporation  universally  is 
recognized  as  a  ten  per  cent  dividend  par  value;  now,  here  is  one 
line  of  competitive  corporations  that  seem  to  be  getting  a  benefit 
which  they  should  not  have,  and  that  is  trust  companies. 

Q.  Would  it  not  be  better  to  amend  the  law  so  as  to  get  at  the 
full  amount  of  those  corporations  for  taxable  purposes?  A.  It 
is  not  only  amending  the  law  that  will  cover  it;  the  Court  of 
Appeals  decision  recently  made  in  the  case  of  the  Union  Trust 
Company,  has  helped  to  strike  off  in  this  county  at  least  eight 
to  ten  millions  of  assessable  valuation  and  practically  made  it 
exempt;  under  the  statute,  a  shareholder  in  a  corporation  is 
exempt;  the  owner  or  holder  of  the  stock  in  any  incorporated 
company  liable  to  taxation  on  its  capital  shall  not  be  taxed  as 
an  individual  for  such  stock;  the  Court  of  Appeals,  in  the  Union 
Trust  Company  case,  says  that  the  value  of  the  capital  of  a  trust 
company  is  based  upon  its  assets;  now,  as  an  illustration,  the 
assets  of  one  corporation  are  worth  f  500,  while  the  market  value 
of  its  stock  is  |1,000;  there  is  a  difference  of  $500  in  actual  value; 
the  decision  of  the  Court  of  Appeals  says  that  the  assets  of  that 
corporation  must  be  the  determining  value  of  the  capital,  and 
that  extra  $500,  on  account  of  this  provision  of  the  law,  is  practi- 
cally exempt,  the  corporation  paying  taxes  upon  its  capital  and 
the  shareholder  being  exempt,  the  corporation  can  only  be  taxed 
upon  $500,000,  while  the  shareholder  has  in  his  possession  a  valua- 
tion of  $1,000,000. 

By  Mr.  Coggeshall. 

Q.  It  is  absolutely  exempted  under  the  law?  A.  No,  sir;  but 
there  is  a  difference  of  $500,000  valuation  that  you  can  not  get 
at  under  the  present  decisions. 

By  Mr.  Creamer. 

Q.  Have  you  those  reports  from  the  corporations  that  we 
asked  for?  A.  Yes,  sir. 

Q.  Take  life  insurance  companies;  you  say  they  have  been 
exempted  by  law;  in  what  year?  A.  The  law  of  1855  made  the 
11 


Mutual  Life  Insurance  Company  liable  on  f  100,000  only;  accumu- 
lations in  any  life  insurance  companies  held  for  the  exclusive 
benefit  of  the  assured  are  not  liable  to  taxation;  that  is  the  law 
of  1S57;  then,  the  law  of  1884  states:  "All  moneys,  benefits, 
charity,  relief  or  aid  received  or  collected  by  any  corporation, 
association  or  society  doing  a  life  or  causal ty  insurance  business, 
or  both,  upon  the  co-operative  or  assessment  plan  and  which 
money,  benefits,  charity,  relief  or  aid  are  derived  from  admission 
fees,  dues  and  assessments  or  any  interests  or  other  accretions 
thereon,  and  which  are  to  be  used  for  the  payment  of  assessments 
or  for  death  losses  or  for  benefits  to  disabled  members  shall 
be  exempt  from  assessment  and  taxation." 

Q.  Do  you  remember  as  to  the  local  authorities  here  asking 
for  that  law?  A.  No. 

Q.  The  law  of  1884?  A.  No,  sir;  we  had  nothing  to  say  about 
that. 

Q.  Who  represented  the  city  at  the  State  capitol  at  that  time; 
the  law  department  is  supposed  to  represent  your  office?  A.  I 
don't  think  the  city,  then,  had  any  representative  directly  that 
I  remember;  I  mean  from  the  corporation  counsel's  office. 

Q.  After  1884?  A.  That  is  the  last  act  affecting  life  insurance 
companies. 

Q.  Then,  that  exempts  them  from  all  taxation  except  on  the 
realty?  A.  Yes,  sir. 

Q.  All  life  insurance  companies?    A.  Yes,  sir. 

Q.  What  is  your  judgment  concerning  that  state  of  affairs; 
A.  I  am  not  in  favor  of  that;  I  don't  see  why  life  insurance  com- 
panies should  exempt,  because  they  are  money-making  associa- 
tions generally. 

Q.  Are  you  familiar  with  the  fact  that  some  of  their  profits 
are  so  large  that  they  give  their  agents  as  high  as  thirty  or  forty 
per  cent  commission?  A.  So  I  understand. 

By  the  Chairman. 

Q.  Do  you  know  anything  about  it  as  a  matter  of  fact?  A,, 
Just  from  general  knowledge  and  inquiry  made  of  some  of  those 
agents. 


83 

By  Mr.  Tierney. 

Q.  What  return,  for  instance,  does  any  of  those  leading  corpora- 
tions make  to  your  office  concerning  personal  property,  if  any? 
A.  Here  is  the  largest  of  them,  the  Equitable  Life  Society;  capi- 
tal stock  actually  paid  in  and  invested  in  United  States  bonds 
$100,000;  net  surplus  earnings  belong  to  stockholders;  rate  of 
dividend  limited  to  three  and  a  half  per  cent  serni-annually  on 
the  capital  sock  of  $100,000;  assessed  valuation  of  real  estate, 
$3,800,000;  amount  invested  in  stocks  of  other  corporations  which 
are  taxable  upon  their  capital  $1,299,300;  amount  invested  in 
United  States  securities,  $790,000;  capital  of  the  company, 
$100,000,  invested  in  government  bonds  and  deposited  in  com- 
pliance with  the  laws  of  the  State  of  New  York  with  the  Superin- 
tendent of  the  Insurance  Department  in  Albany;  accumulations 
are  held  for  the  exclusive  benefit  of  the  assured. 

Q.  Is  that  report  made  in  compliance  with  the  law  concerning 
such  companies?  A.  Yes,  sir;  I  think  so. 

Q.  Then  outside  of  their  realty  they  pay  no  tax  to  the  city 
government?  A.  No,  sir. 

Q.  That  assessment  on  the  realty,  what  proportion  does  that 
bear  to  the  amount  they  certify  to  be  its  value  in  making  up 
their  assets  in  the  report  to  the  Superintendent  of  Insurance? 
A.  I  think  it  is  very  small. 

Q.  What  reason  is  there  then  that  in  that  case  there  should 
not  be  an  adjustment?  A.  The  old  Marine  Bank  made  a  state- 
ment of  something  like  $370,000  or  $400,000  as  the  value  of 
real  estate,  and  we  had  it  assessed  at  $300,000,  and  when  it  came 
!  to  sell  it  sold  for  $250,000;  we  had  to  reduce  it;  on  that  general 
condition  of  affairs  we  don  1  take  the  statement  of  the  corpora- 
j  tion  as  to  its  valuation;  wa  have  to  use  our  own  judgment  as  to 
the  fair  valuation,  in  comparison  with  all  other  property  sur- 
rounding it. 

Q.  You  estimate  it  by  comparison?  A.  Yes,  sir;  as  well  as  the 
general  valuation  itself;  this  building  is  somewhat  exceptional. 

Q.  Is  it  assessed  differently  because  it  is  an  exceptional  con- 
struction? A.  In  cost  only. 


84 

Q.  A  residence  may  foe  an  exceptional  residence,  but  a  man 
required  to  pay  a  reasonable  proportion  of  its  cost?  A.  The 
element  that  enters  into  this  is  the  element  of  what  it  would 
sell  for. 

Q.  Is  that  the  manner  in  which  you  arrive  at  your  conclusion 
in  this  city  —  what  it  will  sell  for?  A.  What  it  will  sell  for. 

Q.  Not  the  amount  that  the  books  show  was  expended  upon  it? 
A.  No,  sir. 

Q.  If  the  books  show  that  that  building  cost  f  14,000,000  it 
should  be  assessed  for  more  than  $380,000?  A.  I  don't  care 
to  dwell  upon  this  particular  building;  there  is  a  constant 
uneasiness  in  the  lower  section  of  this  city  owing  to  favoritism, 
as  it  is  alleged  concerning  certain  classes  of  real  estate  to  the 
injury  of  the  neighbors. 

By  the  Chairman. 

Q.  As  you  understand  it,  isn't  it  a  uniform  rule  adopted  by  the 
assessors  to  fix  the  value  of  real  estate  at  what  it  would  bring  at 
a  forced  sale?  A.  No;  we  don't  have  that  rule  here;  the  Consoli- 
dation Act  provides  our  rule  for  assessment,  and  the  language 
of  the  Consolidation  Act  is  what  it  will  sell  for  under  ordinary 
circumstances;  whether  you  consider  that  a  forced  sale  or  not 
is  a  question;  I  don't  consider  it  so;  what  it  would  sell  for  under 
ordinary  circumstances;  the  definition  of  that  rule  that  we  use 
is  what  would  fairly  be  loaned  by  a  careful  conservative  cor- 
poration upon  property,  so  that  they  would  not  lose  if  the  market 
should  go  down  to  any  ordinary  degree;  that  would  be  what 
would  be  termed  an  ordinary  valuation. 

Q.  You  don't,  of  course,  go  into  the  question  as  to  whether  or 
not  there  has  been  extravagance  in  the  construction  of  the 
property?  A.  No,  sir. 

By  Mr.  Quigley. 

Q.  In  looking  over  this  report  of  the  Equitable  Life  Insurance 
Society  I  notice  "Accumulations  of  the  society  are  held  for  the 
exclusive  benefit  of  the  assured  and  are  exempted  from  taxation 


85 

by  section  4  of  chapter  45G  of  the  Laws  of  1857 ; "  now,  what  are 
included  in  those  accumulations  of  the  society?  A.  As  we  under- 
stand all  their  assets  are  included  in  accumulations  for  the  benefit 
of  the  policy  holders. 

Q.  Then  virtually  all  the  assets  of  such  a  corporation  are 
exempted  under  the  law?  A.  Yes,  sir. 

Q.  Would  you  favor  an  amendment  of  the  law  which  would  take 
the  accumulations  of  the  society  out  of  that  exemption  act? 
A.  I  don't  know  why  we  should  not;  yes,  sir;  I  would  favor  it. 

Q.  Would  not  that  have  a  tendency  to  increase  the  income  of 
the  State  and  cifcy  from  those  corporations?  A.  Very  much 
indeed. 

Q.  Have  you  any  idea  how  much  the  accumulations  of  the 
Equitable  Society  are  at  the  present  time?  A.  I  think  it  runs 
to  130  odd  millions. 

Q.  And  those  130  odd  millions  are  held  for  the  benefit  of  the 
assured  in  the  society?  A.  Yes,  sir. 

Q.  In  what  way  do  they  receive  the  benefit?  A.  I  can  not 
answer  that  question,  except  just  as  ordinary  life  insurance  com- 
panies do;  these  accumulations  are  for  the  payment  of  the  life 
policies;  the  assured  get  the  benefit  of  it  by  then*  policy  being 
paid  when  it  becomes  due. 

Q.  Those  accumulations  are  not  used  every  year  to  pay  accru- 
ing policies,  are  they?  A.  I  suppose  not. 

Q.  They  are  drawn  upon,  are  they  not?  A.  Part  of  them,  I 
suppose. 

Q.  Have  you  any  knowledge  as  to  the  amount  of  the  increase 
in  those  accumulations  within  the  past  ten  years?  A.  I  think 
,they  are  very  large. 

Q.  What  is  the  situation  to-day  as  compared  with  ten  years 
in  the  amount  of  the  accumulations  of  the  Equitable  Society? 
I  could  not  give  you  the  figure,  but  from  my  general  knowledge 

the  situation  I  suppose  it  is  $75,000,000. 

Q.  Have  you  any  idea  in  what  direction  those  accumulations 
invested?    A.  Yes,  sir;  some  in  real  estate. 


86 

Q.  And  then  the  Equitable  Society  owns  real  estate  as  part  of 
those  accumulations?  A.  Yes^  sir. 

Q.  Don't  that  take  them  out  of  the  category  of  personal  prop- 
erty? A.  So  far  as  that  is  concerned. 

Q.  Then  they  are  assessed  as  real  estate?    A.  Yes,  sir. 

Q.  Has  the  real  estate  of  the  Equitable  Society  increased  per- 
ceptibly within  ten  years  past  from  the  accumulations  that  have 
been  changed  to  real  estate?  A.  The  only  real  estate  that  we 
know  that  the  Equitable  owns  is  the  real  estate  that  that  assess- 
ment is  against,  which  is  their  principal  building  at  Cedar  street 
and  Pine. 

Q.  If  the  Equitable  Society  should  have  placed  a  certain  por- 
tion of  those  accumulations  in  real  estate  in  this  city,  there 
would  be  no  doubt  but  that  the  tax  gatherer  would  reach  the 
real  estate?  A.  They  would  reach  it,  no  doubt. 

Q.  If  the  Equitable  Society  had  more  real  estate  than  $3,800,000 
in  the  city  of  New  York,  its  report  would  show?  A.  It  ought 
to  show,  but  they  may  consider  the  balance  of  that  real  estate 
as  a  part  of  the  accumulations  as  you  .put  it,  and  claim  exemption, 
although  it  is  assessed  as  real  estate. 

Q.  Is  it  possible  under  our  present  law  for  the  Equitable 
Society  to  own  real  estate  in  the  city  of  New  York  that  would 
be  exempt  from  taxation  because  it  is  accumulations  for  the 
benefit  of  the  assured?  A.  No,  sir;  I  don't  think  so;  it  is  not 
possible  so  far  as  their  real  estate  is  concerned. 

By  the  Chairman. 

Q.  Now,  commissioner,  you  say  that  so  far  as  your  information 
gx>es,  the  holdings  of  the  Equitable  Life  Insurance  Company 
amounts  to  f  137,000,000  I  think  you  said;  these  holdings,  so  far 
as  you  know,  are  not  all  located  within  the  city  and  county  of 
New  York,  are  they?  A.  No,  sir;  I  suppose  not. 

Q.  Nor  in  the  State  of  New  York?  A.  Nor  in  the  State  of  New 
York. 

Q.  So  that  so  fsr  as  you  know  you  have  reached  all  the  property 
of  the  Equitable  Life  Assurance  Society  located  within  the  city 
ami  county  of  New  York?  A.  So  far  as  we  know. 


87 

By  Mr.  Guenther. 

Q.  Those  holdings  might  perhaps  be  in  some  other  name;  they 
would  not  be  in  the  name  of  the  association?  A.  They  may  be. 

By  Mr.  Creamer. 

Q.  This  is  the  only  information  you  have  of  this  Equitable  com- 
pany? A.  That  is  all  for  1892. 

Q.  It  runs  along  the  same  every  year?    A.  Yes,  sir. 

Q.  Are  you  familiar  with  the  report  they  make  concerning 
the  amount  of  real  estate  that  they  have  to  the  State ?*-  A.  No, 
sir;  I  am  not. 

Q.  They  pay  no  personal  taxes?     A.  No  personal  taxes. 

Q.  Has  your  office  over  sent  a  bill  on  this  subject  including  them 
in  the  list?  A.  No,  sir. 

Q.  What  other  reports  have  you  there?  A.  I  have  the  Mutual 
Life  and  a  few  others  of  the  insurance  companies  and  the  telegraph 
companies  under  that  question  brought  up  last  session,  that  they 
are  only  liable  on  their  poles  and  wires;  I  have  the  corporation 
counsel's  opinion  at  that  time  if  you  want  that  given  to  the  depart- 
ment as  to  their  exemption  upon  their  capital. 

Q.  Exemption  of  whom,?     A.  Telegraph  companies. 

Q.  What  year  was  this?  A.  Eighteen  hundred  and  eighty-five, 
and  it  says  that  the  capital  stock  of  telegraph  companies  can 
not  be  assessed. 

Q.  Which  counsel  was  that?  A.  Judge  Lacombe  —  he  is  judge 
now. 

Q.  That  is  under  the  law  of  1857,  is  it?  A.  Eighteen  hundred 
and  fifty-three  or  1854. 

Q.  The  law  don't  reach  them?     A.  The  law  don't  reach  them. 

Q.  Was  there  an  effort  made  to  change  the  law?  A.  Yes,  sir; 
upon  a  suggestion  I  made. 

Q.  To  whom?  A.  Senator  Cullom;  I  found  a  copy  of  the  bill  in 
the  office;  in  1886,  I  think,  he  presented  it  in  the  Senate;  it  was 
printed  and  that  was  the  end  of  it. 

Q.  Sent  'where;  to  the  committee  on  grievances?  A.  I  don't 
know  what  became  of  it. 


By  Mr.  Ahearn. 

Q.  The  corporation  counsel  basses  his  opinion  on  the  law  of  1854? 
A.  Chapter  471  of  the  Laws  of  1854. 

By  Mr.  Creamer. 

Q.  That  exempts  the  Western  Union,  as  I  understand?  A.  Yes, 
sir;  the  Western  Union  has  been  paying  an  assessment  of 
$100,000  on  their  capital  by  consent  a  great  many  years. 

Q.  What  is  their  capital?  A.  Some  eighty  odd  millions,  I 
believe;  I  think  it  has  lately  been  increased  to  $100,000,000. 

Q.  Is  your  office  cognizant  of  the  history  of  the  company  con- 
cerning its  movements  as  regards  claiming  a  heavy  indebtedness 
at  the  tax  office  and  then  within  a  very  short  space  doubling  their 
capital  on  the  surplus  and  all  such  transactions  in  the  face  of 
high  Heaven,  and  still  being  exempt  on  the  tax  books?  A.  No, 
sir;  I  don't  know  of  any  such  claim. 

Q.  This  telegraph  company  owns  to  a  capital  stock  of  $360,000 
and  it  is  now  over  $100,000,000;  do  you  think  it  is  the  duty  of 
some  branch  of  our  government  to  look  into  the  affairs  of  such 
a  corporation  from  a  business  standpoint  and  see  how  much, 
they  can  contribute  towards  the  city  whose  streets  they  have  used 
and  monopolized  for  so  many  years?  A.  Yes,  sir;  I  don't  see  why 
they  should  not  be  put  on  a  par  with  other  corporations;  I  want 
to  suggest  as  an  amendment  —  we  attempted  to  hold  the  express 
companies,  which  are  associations,  and  the  Court  of  Appeals 
determined  that  they  were  not  liable  as  corporations;  now,  they 
practically  have  all  the  attributes  of  a  corporation,  and  it  seems 
to  me  the  law  ought  to  be  amended  by  which  they  would  be 
made  subfect  to  the  same  laws  as  any  other  corporation;  I  have 
spoken  to  you  on  the  subject  of  the  trust  companies,  and  I  think  they 
ought  to  be  put  in  the  same  position,  as  they  are  competitive  with 
banks  by  assessing  them  not  as  corporations,  but  assessing  their 
shareholders,  giving  them  the  same  privileges  as  shareholders  of 
banks;  the  banks  are  constantly  complaining  that  those  trust 
companies  are  in  competition  with  them,  and  they  have  an  oppor- 


89 

tunity  given  by  law  of  making  investments  in  non-taxable  assets ; 
we  found  them  a  valuation  for  this  year  of  6,694,944,  out  of  a  pos- 
sible assessment  of  46,000,000  on  their  capital  and  surplus,  deduct- 
ing 4,000,000  for  their  assessed  value  on  real  estate,  and  if  they 
were  on  the  same  basis  of  banks  they  w^ould  be  liable  to 
$42,000,000  in  place  of  f 6,000,000,  subject  to  deduction  by  debts; 
if  we  assume  the  deduction  on  trust  company  shares  would  be 
equal  to  bank  shares,  we  would  have  an  assessment  of  $32,000.000 
as  against  $6,000,000  in  the  city  of  New  York;  on  account  of  that 
decision  of  the  Court  of  Appeals,  as  I  said,  compelling  us  ,.co  take 
the  assets  of  trust  companies,  when  their  valuation  is  so  far  above 
their  assets,  in  every  instance  almost,  because  of  their  earning 
capacity,  which  is  the  true  theory  of  making  assessments  practi- 
cally upon  all  corporations. 

By  Mr.  Coggeshall. 

Q.  You  stated  that  it  was  difficult  to  reach  bonds  and  mortgages 
for  the  purposes  of  taxation;  what  legislation  do  you  suggest  that 
will  be  more  successful  and  certain  in  reaching  them?  A.  As 
in  connection  with  the  present  system,  I  know  of  no  reason  why 
bonds  and  mortgages  should  not  be  assessed  as  against  the  bond 
and  mortgage  and  not  as  against  the  individual,  so  that  if  it  was 
a  non-resident  individual  we  would  hold  the  bond  and  mortgage; 
the  difficulty  would  be  in  adopting  a  system  that  would  be  able  to 
carry  that  out.  , 

By  Mr.  Creamer. 

Q.  There  is  a  commission  now  I  believe,  at  the  State  capitol, 
authorized  by  the  Legislature  of  last  winter,  revising  the  tax 
laws;  are  you  aware  there  is  such  a  commission?  A.  No;  I  was 
not  aware  of  it. 

Q.  There  was  one  created  last  winter;  they  have  been  in  exist- 
ence for  eight  months  past;  they  have  not  consulted  with  your 
tax  office  here,  to  your  knowledge?     A.  No,  sir;  they  have  not. 
12 


90 

Q.  Have  you  consulted  with,  them,  or  made  any  effort  in  that 
direction?  A.  I  was  not  aware  that  there  was  one  in  existence. 

Q.  Isn't  there  an  officer  in  your  department  who  reads  the 
laws  of  the  State  concerning  your  department?  A.  The  com- 
missioners do,  and  I  do  as  a  lawyer,  but  I  have  not  had  an  oppor- 
tunity to  do  it  myself,  because  the  session  laws  did  not  come  out 
until  about  two  weeks  ago;  they  have  been  very  late  this  season. 

Q.  Supposing  a  law  went  into  effect  concerning  the  assessment 
of  real  estate?  A.  We  expected  to  be  able  to  do  it;  I  have  par- 
tially gone  over  it;  in  fact,  the  corporation  law  has  raised  this 
very  question;  Mr.  Paris  and  I  were  talking  about  it  the  other 
day  as  to  whether  the  definition  of  what  a  corporation  is  may  cover 
this  question  of  the  express  companies  that  I  have  been  apeaking 
about;  we  propose  to  try  it  on  this  year  as  to  whether  or  not 
they  are  a  corporation  under  the  law  now  for  the  purposes  oi 
taxation. 

By  Mr.  Quigley. 

Q.  Have  you  got  that  definition  here?  A.  No,  sir;  I  think  it  is 
transportation  companies;  it  says  railroads  or  other  transporta- 
tion companies;  now,  as  to  an  insane  person  or  lunatic,  the  courts 
have  decided  that  you  must  assess  an  insane  person,  because  the* 
committee,  under  the  law,  is  not  given  the  title  absolute  to  his 
property;  he  is  only  for  the  care  and  protection  of  the  property; 
we  assessed  a  committee,  naming  the  person  in  that  connection, 
and  found  our  assessment  was  not  held,  and  now  to  assess  an 
insane  person,  that  practically  shuts  him  off  from  any  hearing; 
there  is  an  inconsistency  in  the  condition  of  affairs,  and  I  make 
a  suggestion  that  the  law  ought  to  be  amended  so  that  the  com- 
mittee would  be  assessed  in  place  of  the  person. 

By  Mr.  Coggeshall. 

Q.  I  suppose  the  committee  would  be  entitled  to  act  for  the 
person  befoiv  tin*  commissioners?  A.  They  don't  attempt  to 
act;  now,  we  have  assessed  one  insane  person,  John  Brown,  or 
whatever  it  is,  by  so  and  so,  a  committee,  and  attempted  to  show 


91 

in  court  that  so  and  so  was  mere  surplusage,  and  merely  for  the 
purpose  of  locating  the  individual;  that  has  not  been  settled. 

Q.  As  the  law  is  now  you  assess  the  lunatic  ?    A.  Yes,  sir. 

Q.  What  law  is  that?  A.  Under  the  General  Statutes,  they 
provide  that  in  case  an  assessment  has  been  made  as  against 
an  executor  or  trustee,  etc.,  that  it  shall  be  made  as  against  them 
with  their  designation  of  office,  but  it  don't  include  the  com- 
mittee of  a  lunatic,  and,  therefore,  they  come  under  the  General 
Statutes  as  to  individuals;  now,  the  act  of  1883,  which  was 
passed  for  the  purpose  of  obviating  the  difficulty  of  peopie  carry- 
ing their  evidences  of  indebtedness,  bonds  and  mortgages  and 
things  of  that  sort,  and  leaving  them  over  in  New  Jersey,  and 
then  claiming  before  us  that  the  property  was  not  under  our 
jurisdiction,  did  not  cover  executors  and  trustees  under  the  Court 
of  Appeals  decision;  that  only  refers  to  persons,  and  those  per- 
sons the  owners  of  the  securities;  now,  executors  and  trustees, 
the  Court  of  Appeals  has  held  that  that  act  did  not  apply  to 
them,  and,  therefore,  it  ought  to  be  amended  and  made  to  apply 
to  them  just  as  well  as  anybody  else,  because  the  question  arises 
with  them  as  well  as  it  does  with  individuals. 

By  Mr.  Ahearn. 

Q.  That  is  with  reference  to  where  one  of  the  executors  is  not 
a  resident  of  the  State?  A.  Even  whether  he  was  a  resident 
or  not,  so  far  as  this  act  is  concerned,  if  they  brought  the  securi- 
ties to  New  Jersey  and  left  them  there  they  might  not  be  held 
liable. 

Q.  Then,  you  suggest  there  should  be  a  change  in  regard  to 
the  lunatic  system,  and  that  the  committee  in  a  body  or  indi- 
vidually should  be  held;  which  do  you  mean?  A.  The  committee, 
whoever  it  may  be;  there  is  generally  only  one. 

Q.  What  I  meant  by  that  was  that  the  individual  picked  out 
on  that  committee  might  be  a  resident  of  the  State  of  New 
Jersey,  and  you  would  be  in  the  same  position?  A.  That  may 
luippen,  of  course,  if  the  lunatic  was  a  resident  here  the  prob- 


92 

ability  is  he  would  have  a  resident  committee;  those  are  some 
of  the  things  that  happen,  you  know. 

By  Mr.  Creamer. 

Q.  There  seems  to  be  some  doubt  as  to  the  Western  Union 
company;  do  you  say  that  the  entire  amount  that  they  are 
assessed  on  in  personalty  is  embraced  in  this  return  of  $98,000,000  ? 
A.  One  hundred  million  dollars. 

Q.  And  that  they  are  exempt  from  taxation  on  the  capital?  A. 
Yes,  sir;  that  is  supposed  to  be  their  poles  and  wires  alone. 

Q.  That  is  their  capital?    &  Yes,  sir. 

Q.  They  pay  no  taxes  then  on  their  real  estate  to  the  city  treas- 
ury beyond  this  sum?  A.  No,  sir. 

Q.  This  construction  of  the  law  then  concerning  their  exemp- 
tion from  assessment  on  capital  exempts  the  individual  stock- 
holders as  well?  A.  I  don't  know  as  that  question  has  ever 
been  raised;  I  don't  think  it  does. 

Q.  If  it  did  not,  you  would  assess  them?    A.  Yes,  sir. 

Q.  Take  this  case  where  you  say  that  there  is  100,000,000 
of  personal  property  floating  around  somewhere?  A;  Now, 
let  me  see;  I  think  it  does  exempt  them,  because  their 
capital  is  assessed,  but  under  the  law  it  is  assessed  at  the  valua- 
tion of  the  construction  or  reconstruction  of  their  poles  and  wires ; 
now,  if  the  poles  and  wires  are  assessed,  as  they  are  assessed, 
as  real  estate,  since  that  act  of  1853  the  law  has  been  amended 
by  which  poles  and  wires  are  determined  to  be  real  estate  for  the 
purpose  of  assessment,  and  so  the  real  estate  is  assessed,  and 
because  the  real  estate  is  assessed  you  can  not  get  any  valuation 
upon  their  capital  for  the  reason  that  the  law  makes  the  basis 
of  it  the  valuation  of  their  poles  and  wires  which  are  already 
assessed  as  real  estate. 

Q.  Well,  do  you  remember  about  how  much  this  corporation 
pays  in  this  city  on  its  real  estate?  A.  I  believe  their  building 
is  assessed  about  1,300,000. 

Q.  Outside  of  the  building?  A.  They  only  pay  on  that 
$100,000. 

Q.  Nothing  then  on  their  plant  here  in  the  city?    A.  Yes,  sir; 


93 

their   plant;   their  poles   and  wires   are   separately;   they   have 
another  report  for  that  which  I  did  not  bring. 

Q.  You  have  not  got  that  here?  A.  No,  sir;  they  have  to  render 
that  every  year. 

Q.  From  your  recollection  how  much  is  this  company  assessed 
at;  this  is  an  exceptional  company?  A.  I  have  not  got  the 
figures. 

Q.  About   how   much?    A.  I   think   it   is   about   that;    that 
amount  they  put  in  there,  $98,000. 

Q.  For  all  their  plant,  their  poles  and  wires?    A.  Yes^  sir. 

Q.  A  corporation  with  a  capital  of  |100,000,0()0  not  assessed 
altogether  in  the  city  here  more  than  f 200,000?  A.  I  don't  give 
you  that  positive;  I  would  have  to  look  at  the  report  on  poles  and 
wires. 

Q.  What  is  your  best  recollection?  A.  I  have  not  looked  at 
that  assessment  as  made  by  the  deputies  on  poles  and  wires  by  a 
sworn  statement  made  to  them;  I  know  they  are  assessed  on  their 
poles  and  wires,  upon  a  separate  statement  rendered  about  this 
season  of  the  year  and  sworn  to,  and  divided  among  the  different 
deputies. 

Q.  Then  you  no  doubt  recommend  a  change  in  regard  to  those 
companies?  A.  I  think  Senator  C alien  presented  the  bill  and 
had  it  printed  and  fought  for  it,  I  suppose;  he  happened  to  be 
the  Senator  of  the  district  in  which  I  resided  at  the  time. 

By  the  Chairman. 

Q.  I  find  here  a  bundle  of  statements  of  assessments  on  news- 
paper publishing  companies;  the  Sun  Printing  and  Publishing 
Association  assessment  fixed  at  f  199,000;  Tribune  Association, 
assessment  fixed  at  $3,400. 

Mr.  Creamer. —  I  desire  to  state  that  there  is  no  record  of  the 
gentleman  on  the  stand  having  been  asked  to  produce  those 
papers. 

The  Chairman  (continuing).  Evening  Post  Publishing  Company 
assessment  fixed  f  100,000;  the  Mail  and  Express  Publishing  Com- 


94: 

pany,  |10,000.  Will  you  explain  to  the  committee,  if  you  please, 
how  there  comes  to  be  such  a  variance? 

A.  The  capital  stock  of  the  Mail  and  Express  Company  is 
|10,000;  the  Court  of  Appeals  has  held  that  we  can  not  get  over 
that;  the  capital  of  the  Evening  Post  Publishing  Company  is 
|100,000;  they  are  assessed  at  $100,000;  the  capital  of  the  Tribune 
Association  is  $200,000;  they  have  a  building  $540,000  valuation; 
so  they  swear  to  $754,000  of  assets  and  we  give  them  a  deduction 
of  the  real  estate  $540,000,  and  their  debts  which  leaves  them 
liable  for  P,300;  the' Sun  Printing  and  Publishing  Company 
have  a  capital  of  $350,000;  their  assets  are  sworn  to  as  $590,000; 
their  real  estate  $153,628,  and  their  debts  $238,000;  $391,000 
from  $590,000  makes  an  assessment  of  $198,543;  the  real  estate 
is  deducted  from  each  of  1he  valuations;  the  Tribune  swear  to 
$720,054;  that  the  Court  of  Appeals  says  we  must  take  in  all 
corporations  as  the  basis  of  valuations;  then  we  deduct  the  real 
estate  value  $540,000,  and  their  debts,  $211,000,  leaving  $3,356. 

Q.  Take,  if  you  please,  the  report  of  the  Evening  Post;  do  they 
return  any  real  estate?  A.  No. 

Q.  Do  you  know  as  a  matter  of  fact  whether  the  Evening  Post 
Publishing  Company  own  any  real  estate  as  such  company?  A. 
I  don't  know  whether  they  do  or  not. 

Q.  Do  you  know  whether  the  Sun  Publishing  Company  owns 
any  real  estate?  A.  As  a  company? 

Q.  Yes,  sir?    A.  I  do  not 

By  Mr.  Creamer. 

Q.  I  don't  believe  that  the  newspaper  people  should  be  sub- 
jected to  analysis  unless  it  becomes  general?  A.  The  same  rule 
applies  to  them  as  to  all  corporations. 

By  the  Chairman. 

Q.  As  chairman,  speaking  for  the  committee,  I  desire  to  say 
that  those  reports  were  not  selected  only  for  the  purpose  of  ascer- 
taining the  method  used  in  assessing  those  corporations,  a*  the 
committee  has  questioned  the  witness  in  reference  to  other  cor- 


95 

porations;  I  see  in  one  case  that  a  large  deduction  is  made  for 
real  estate  as  an  offset,  and  in  the  other  cases  there  are  no  such 
deductions;  that  is  the  reason  for  asking  the  question  as  I  did;  if 
the  Sun  Publishing  Company  owns  real  estate,  they  have  not 
used  it  for  an  offset;  in  the  case  of  the  Tribune  they  have?  A. 
That  is  true. 

Q.  Now  I  desire  to  ascertain  whether  the  witness  can  give  us 
any  information  as  to  whether  the  real  estate  is  used  in  all 
instances  or  only  in  certain  instances  as  an  offset;  I  don't  know  of 
any  particular  reason  why  the  committee  should  be  afraid  to 
inquire  in  the  affairs  of  the  publishing  corporations  any  more 
than  any  other?  A.  So  far  as  we  are  concerned,  you  can  inquire 
into  anything  and  everything;  the  Sun  Publishing  Company  has 
used  real  estate  to  the  amount  of  $153,000,  leaving  them  liable 
for  $198,943. 

By  Mr.  Creamer. 

Q.  Why  not  assess  that  building  at  its  proper  valuation,  and 
deduct  all  the  personal  the  same  as  others;  the  assessment  there 
is  away  out  of  proportion  to  what  other  buildings'  in  Printing 
House  square  are  assessed  at;  why  does  not  the  rule  apply  in  all 
cases?  A.  As  to  the  valuation  of  the  buildings? 

Q.  Why  not  wipe  out  personal  altogether  by  a  proper  valuation 
of  the  real  estate?  A.  The  statement  as  to  valuation  on  that 
uilding  may  not  be  altogether  correct;  the  deputy  always  goes 
ver  those  cases;  we  grant  them  nothing  more  than  they  are 
ntitled  to;  there  is  no  statement  of  a  corporation  so  far  as  real 
state  is  concerned  that  is  ever  taken  as  absolutely  correct, 
>ecause  we  require  them  to  furnish  us  the  ward  and  block  num- 
>er,  and  then  give  the  deduction  of  the  actual  assessed  value, 
whatever  it  may  be. 

By  the  Chairman. 

Q.  Can  you  tell  the  committee  what  the  real  estate  of  the 
Mbune  is  assessed  for?  A.  It  is  estimated  at  $540,000. 

Q.  And  the  allowance  is  the  same  as  the  assessment?  A.  Yes, 
ir. 


96 

Q.  You  recommend  that  the  levying  of  taxes  for  State  and 
local  purposes  ought  to  be  separated?  A.  Yes,  sir. 

Q.  You  also  recommend  that  there  ought  to  be  a  system  adopted 
so  as  to  relieve  real  estate  of  a  tax  for  the  support  of  the  general 
State  government?  A.  That  is  it. 

Q.  You  also  recommend  that  there  ought  to  be  a  tax  upon 
bonds  and  mortgages?  A.  Of  a  very  small  amount,  and  relieve 
them  from  local  taxation. 

Q.  Did  I  also  understand  you  to  recommend  that  property  of 
estates  should  be  exempted  from  local  taxation?  A.  I  propose 
that  as  another  line  of  capital  which  is  fairly  certain  for  the  State 
to  be  able  to  raise  its  necessary  amount;  I  have  selected  that  as  an 
additional  certain  line  of  capital  as  well  as  bonds  and  mortgages. 

Q.  You  also  recommend  that  a  system  ought  to  be  udopied 
whereby  property  held  by  executors,  if  to  be  taxed  at  all,  bhould 
be  taxed  where  it  is  rather  than  where  the  executor  lived?  A.  In 
line  with  the  State  system  upon  estates,  then  it  would  be  assessed, 
I  suppose,  at  the  State  capitol,  no  matter  where  the  property 
was  in  the  State,  and  in  that  way  you  would  relieve  us  of  the 
difficulties  that  now  exist  of  determining  where  it  should  be 
valued. 

Q.  The  executors,  as  I  understand  you,  sometimes  live  out  of 
the  city?  A.  Yes,  sir;  and  then  to  cover  that,  I  say  it  should  be 
taxed  within  the  State,  if  the  decedent  died  within  the  State. 

Q.  You  further  recommend  that  there  be  no  deduction  for 
indebtedness  on  personal  property?  A.  As  to  those  two  lines  of 
capital. 

Q.  What  would  you  raise  money  for  local  taxation  on  if  you 
take  bonds  and  mortgages  off?  A.  My  own  thought  about  that 
is  that  if  the  State  gives  the  city  an  opportunity  to  raise  its  taxes 
as  it  pleases,  we  will  be  able  to  get  up  a  revenue  code;  it  will  not 
be  the  suggestion  of  myself  alone  or  anybody  else,  but  the  com- 
bined suggestion  of  the  mercantile  interest,  so  that  it  will  be  a 
complete  code  affecting  the  business  interests  of  New  York,  and 
,  the  probability  in  my  judgment  is  that  a  considerable  amount 
of  this  pereonal  tax  business  will  be  gat  through  and  a  certain 
and  greater  portion  of  it  will  be  obtained  by  tbe  city. 


97 

Q.  How  would  that  affect  the  rural  parts  of  the  country  where 
they  have  not  those  mercantile  interests  such  as  the  city?  A. 
They  will  settle  themselves  on  the  interests  that  they  have. 

Q.  If  you  take  the  bonds  and  mortgages  out  what  is  there  left 
to  tax  but  the  farms,  hens  and  chickens,  cows,  etc.  ?  A.  There 
are  many  other  cities. 

Q.  There  are  many  localities  where  there  are  no  cities?  A. 
And  their  expenses  must  be  necessarily  light. 

Q.  How  would  you  raise  it,  from  a  tax  on  real  estate  and  what 
else?  A.  It  would  come  to  that  for  local  purposes;  it  comes 
practically  to  that  for  local  purposes. 

By  the  Chairman. 

Q.  Your  idea  would  be  to  leave  it  to  the  local  authorities  how 
to  raise  it?  A.  Yes,  sir;  suppose  we  might  determine  to  make 
a  poll  tax  in  the  city  of  New  York. 

By  Mr.  Gifford. 

Q.  Suppose  New  York  city  and  other  cities  formulate  such 
laws  that  would  virtually  exempt  personal  property  from  taxation, 
what  effect  would  that  have  on  the  country  districts  adjoining 
cities?  A.  I  don't  think  it  would  have  any. 

Q.  Would  it  not  have  this  effect  that  if  you  decided  in  the  city 
of  New  York  to  exempt  personal  property  from  taxation,  and  lete 
the  adjoining  county  supervisors  decide  for  themselves,  wouldn't 
it  have  this  effect,  that  capitalists  in  that  county  would  say  to 
the  supervisors,  "You  must  follow  in  the  line  of  New  York  city, 
or  capital  will  go  from  here  to  New  York  or  Albany  or  Rochester," 
wouldn't  it  have  that  effect?  A.  It  might. 

Q.  Wouldn't  that  work  a  great  injustice  to  the  rural  districts? 
A.  No*  any  more  than  it  does  now ;  if  we  attempt  to  assess  a  very 
wealthy  man,  the  first  thing  you  know  he  skips  off  to  Westchester 
IDT  to  Dutchess  county,  or  some  such  place  as  that  where  they 
!  won't  assess  him  probably  so  much  as  we  would. 
13 


98 

Michael  Coleman,  being  duly  sworn,  testified  as  follows: 
By  Mr.  Creamer. 

Q.  You  were  tax  commissioner  of  New  York  for  how  many 
years,  deputy  and  commissioner?  A.  Deputy  and  commissioner 
for  twenty  years. 

Q.  We  desire  to  inquire  concerning  the  effect  of  legislation, 
particularly  as  regards  personal  property,  in  recent  years,  during 
your  term  of  office  as  commissioner,  as  to  whether  it  had  a  ten- 
dency to  send  capital  elsewhere;  what  effect  generally  it  has  had? 
A.  In  my  opinion  it  has  had  a  very  serious  effect. 

Q.  Give  the  committee  an  illustration  of  what  you  think. 
A.  My  first  experience  in  relation  to  that  matter  was  in  1869; 
prosperity  had  been  throughout  the  country  after  the  war, 
and  those  seeking  homes  who  had  accumulated  wealth  faced 
towards  this  city  for  the  purpose  of  purchasing  sites  and  locat- 
ing here;  the  only  location  at  that  time  where  they  possibly 
could  locate  to  be  satisfied  for  their  future  residence  was 
along  the  easterly  side  of  the  park  and  the  upper  part  of 
Murray  Hill;  we  had  several  come  here  who  leased  their 
houses  before  purchasing  such  sites,  and  before  they  were  here  a 
year  the  tax  department  pounced  upon  them  with  such  enormous 
figures  for  personal  assessments  that  outside  of  two  or  three 
the  balance  flew  to  other  parts;  that  property  has  never  recov- 
ered from  the  boom  at  that  time  up  to  the  present  time;  I  don't 
know  as  I  can  give  you  anything  except  the  experience  I  have  . 
had  year  after  year  of  seeing  the  tax  assessments  diminishing 
upon  the  records  of  the  tax  department,  of  individuals  who  had 
become  versed  in  the  law  of  how  to  evade  taxation;  a  large 
amount  that  was  upon  our  books  from  1869  to  1874  was  shown 
to  be  upon  a  false  basis,  and  it  was  exposed  by  the  Hon.  George 
H.  Andrews  in  his  address  to  the  committee  of  ways  and  means 
in  the  board  of  aldermen,  when  he  delivered  an  address  there 
showing  the  amount  of  personal  property  exempt  from  taxation; 
that  was  the  cause  of  the  falling  off  of  some  seventy  to  ninety 
millions. 

Q.  What  years?    A.  Eighteen  hundred  and  seventy-four,  which 


99 

we  had  to  make  up  by  putting  on  a  new  list  of  names,  the  assess- 
ments on  which  we  have  never  been  able  to  collect;  I  might  go 
on  in  detail  in  regard  to  my  reasons  why  I  think  so;  I  have  always 
thought  that  the  assessment  of  personal  property  has  been  detri- 
mental to  the  city. 

Q.  It  has  been  detrimental  ?    A.  Yes,  sir. 

Q.  When  was  it?  A.  It  always  has  been  since  the  law  of 
1857;  we  are  now  acting  under  the  laws  of  1857  and  1859. 

(2.  What  do  you  think  of  the  statement  of  the  State  assessors 
as  to  the  amount  of  personal  property  in  the  State?  ^.  They 
claim  it  is  four  thousand  millions;  A.  That  may  be. 

Q.  If  there  is  only  one  tenth  of  that  on  the  books,  how  can  you 
say  that  it  has  been  assessed;  how  much  of  that  four  thousand 
million  is  assessable  under  the  law;  all  except  what  has  been 
exempted,  I  suppose,  by  special  legislation;  why  is  it  from  your 
experience  that  they  can  collect  on  personal  property  on  other 
Slates  without  it  being  detrimental  or  injurious?  A.  It  is 
according  to  the  laws  of  other  States. 

Q.  Do  other  States  pass  injurious  laws?    A.  Some  of  them  do. 

Q.  WTiat  State;  Massachusetts?  A.  I  think  personal  prop- 
erty taxation  has  been  detrimental  to  the  success  of  Boston  as 
well  as  New  York;  in  Philadelphia,  it  is  a  different  law. 

Q.  In  Boston,  they  assess  personal  property?  A.  I  know  they 
do. 

Q.  Isn't  it  fair  to  presume  that  the  Government  of  Boston  and 
Massachusetts  are  as  fully  informed  on  those  questions  as  our 
people?  A.  They  can  enforce  the  personal  law  tetter  than  in 
New  York;  they  are  not  contiguous  to  another  State  lying  three 
minutes'  sail  away,  like  New  Jersey. 

Q.  They  enforce  it  there;  that  shows  it  is  not  detrimental  when 
they  succeed  in  having  the  property  assessed?  A.  I  still  claim 
that,  in  my  judgment,  it  is  detrimental,  not  so  much  to  them  as 
it  is  to  us. 

Q.  Has  there  been  any  issue  made  in  their  State  as  regards 
that  question  that  throws  any  light  on  the  subject  by  which 
iron  judge?  A.  I  made  an  examination  of  the  tax  records  in 
3oston,  in  1886,  and,  in  my  judgment,  after  the  examination  was 


made,  I  came  to  the  conclusion  that  the  assessment  of  personal 
property  there  was  detrimental  to  the  success  of  Boston;  natur- 
ally, 1  do  not  class  New  York  with  Boston;  New  York  is  a  great 
financial  center;  we  should  attract  capital  here  instead  of  driving 
it  away;  it  is  so  easy  to  go  over  night  to  other  places,  and  what 
we  can  not  hold  within  our  grasp,  we  might  as  well  let  it  come 
in  free. 

Q.  Can  you  show  where  capital  has  been  driven  away  by 
personal  taxation  generally?  A.  It  has  been  my  experience  to 
meet  the  best  class  of  people  who  have  lived  in  the  city  of  New 
York  for  years,  where  they  were  put  under  a  heavy  assessment 
on  personal  property  and  the  following  year  they  placed  them- 
selves in  a  position  to  evade  it  under  the  law. 

Q.  How  is  that  detrimental  to  the  State  to  have  a  nontaxpayer 
here?  A.  It  would  be  much  better  to  have  that  man  have  all 
his  money  here  so  that  it  would  be  free  for  business  purposes. 

Q.  Don't  you  believe  in  the  broad  principle  that  every  resident 
should  contribute  his  share  for  the  government?  A.  They  do. 

Q.  Does  this  gentleman  who  dodges  to  another  State?  A.  We 
can  not  prevent  that. 

Q.  Why?  A.  No;  he  takes  advantage  of  the  law;  if  you  could 
make  a  law  that  you  could  enforce;  don't  place  us  in  a  false  posi- 
tion though. 

Q.  Why  is  it  an  injustice;?  A.  It  is  an  act  of  injustice  when 
they  can  offset  it  that  way. 

Q.  Every  resident  should  contribute  his  share;  now,  if  the  law 
is  defective,  commissioner,  those  people  who  can  afford  to  go  to 
other  States  and  have  several  residences,  but  can  not  afford  to 
contribute  their  share  towards  the  support  of  the  government, 
in  your  experience  in  connection  with  the  tax  office,  do  you  know 
wherein  the  law  is  defective  in  not  reaching  such  people?  A.  I 
only  know  from  a  practical  view  that  for  the  last  twenty-five 
years  they  have  gone  to  New  Jersey  and  built  up  along  the  road 
of  the  Delaware  and  Lackawanna,  the  Erie,  the  New  Jersey  Central 
and  other  railroads,  the  New  York  and  New  Haven  and  the  Long 
Island  railroad-  wf"  ^ave  compelled  them  to  increase  the  capacity 


101 

of  their  roads  nearly  four  times  what  it  was  twenty  years  ago,  and 
along  those  roads  are  men  who  are  in  New  York,  but  are  now 
claiming  residence  there,  doing  business  in  New  York;  we  have 
not  added  to  our  wealth  for  the  last  twenty  years;  we  have  added 
to  our  population,  but  the  people  who  have  come  here  are  not  as 
good,  as  those  driven  away. 

Q.  What  has  driven  them  away?  A.  Taxation;  that  has  not 
been  the  most  serious  thing;  in  1869  along  the  easterly  and  west- 
erly shores  there  were  large  factories  employing  at  one  time  a 
hundred  thousand  skilled  workmen;  the  first  case  that  £ame  up 
was  the  Singer  Sewing  Machine  Company;  for  three  years  they 
conferred  with  the  department  as  to  what  their  taxes  would  be; 
finally  they  moved  to  New  Jersey,  and  from  that  time  up  to 
the  present  time  they  have  been  going  almost  every  year,  and 
to-day  there  is  only  one  large  establishment  that  was  here  at  one 
time,  and  that  is  Hoe's  establishment;  now,  the  class  of  people 
that  follow  those  factories  are  skilled  workmen;  they  are  the  very 
best  class  of  citizens;  they  are  men  who  have  pride  in  their  fami- 
lies, and  just  as  soon  as  their  work  is  moved  in  a  little  time  they 
settle  there. 

Q.  Does  not  the  price  of  land  in  other  States  affect  that  any?  A. 
We  could  have  gone  to  the  twenty-third  and  twenty-fourth  wards 
and  held  them  here. 

Q.  In  1869  there  was  no  twenty-third  or  twenty-fourth  wards? 
A.  The  room  was  there  at  the  same  time. 

Q.  In  recent  years  have  you  known  of  capital  departing  from  the 
State?  A.  It  don't  come  here. 

Q.  Has  recent  legislation  since  1880  affecting  property, 
affected  capital  sufficiently  to  drive  it  from  the  State?  A.  There 
has  been  a  reorganization  since  1889  up  to  the  present  time  of 
nearly  one  thousand  million  of  organized  capital,  a  majority  of 
which  was  located  in  different  businesses  in  the  State  of  New 
York,  who  have  combined  together  and  organized  in  adjacent 
States,  Connecticut,  New  Jersey  and  other  States;  in  regard  to 
Mr.  Feitner's  statement  that  organizations  in  this  State  —  that  it 
gives  them  a  better  standing.  I  will  say  at  the  same  time  the 


102 

reorganization  of  those  corporations  of  one  thousand  millions  are 
in  good  standing;  their  earning  capacity  shows  that;  they  are  con- 
trolled by  the  very  best  class  of  citizens  we  have. 

Q.   What   class   of   corporations?    A.   Well,   American   Type 
Foundry,  H.  B.  Clanin. 

Q.  Have  Claflins  incorporated  in  another  State?  A.  In  New 
Jersey. 

Q.  And  still  the  goods  they  sell  to  the  retail  dealers;  those  are 
taxable  as  personal  property?  A.  The  chances  are  that  ninety 
per  cent  of  their  receipts  are  taken  right  in  New  York. 

Q.  They  are  not  exempt  altogether  on  their  personal  property, 
are  they;  is  not  all  their  capital  here?  A.  Over  and  above  their 
indebtedness;  are  subject  to  whatever  part  of  the  capital  is 
located  here  over  their  indebtedness. 

Q.  We  know  H.  B.  Olafiin  &  Co.  are  here  in  the  city?  A.  We 
see  the  sign  up,  but  we  don't  know  how  much  goods  is  consigned 
to  them  exempt  from  taxation. 

Q.  Why  do  they  incorporate  in  New  Jersey?  A.  Because  I 
suppose  they  are  not  annoyed  every  year;  they  are  not  obliged  to 
make  returns  eveiy  year. 

By  Mr.  Coggeshall. 

Q.  They  have  to  pay  a  tax  every  year?  A.  Yes,  sir;  a  small 
tax. 

Q.  How  much?  A.  A  very  small;  I  think  it  is  one-eighth  of 
one  per  cent  here  in  New  York,  and  the  reorganizations  over 
there,  I  think  it  is  very  low  indeed. 

By  Mr.  Creamer. 

Q.  Do  you  know  that  the  law  has  been  changed  as  to  filing 
annual  statements?  A.  Two  years  ago. 

Q.  They  have  to  file  annual  statements  in  New  Jersey  now, 
don't  they?  A.  I  don't  know. 

Q.  They  are  exempt  from  liability,  that  is,  the  shareholders, 
in  New  Jersey,  are  they?  A.  Yes,  sir. 

Q.  They  went  there  to  avoid  the  corporation  tax,  is  that  what 
you  think?  A.  I  don't  believe  that. 


103 

Q.  What  benefit  do  they  get;  what  benefit  do  they  derive  by 
going  to  New  Jersey  in  view  of  the  fact  that  all  their  capital  is 
located  here,  and  their  business  is  all  done  here,  except  their 
books  may  be  kept  over  there;  what  benefit  do  they  derive  by 
incorporating  over  there?  A.  Their  capital  stock  would  be 
liable  to  taxation  here. 

Q.  Aside  from  the  corporation  tax?  A.  That  is  a  very  impor- 
tant thing;  it  pomes  up  almost  every  day. 

Q.  Do  you  know  how  much  that  is?    A.  I  don't  know. 

Q.  Do  you  know  whether  it  is  any  more  here  than  ove£  there? 
A.  It  is  a  very  small  fraction  over  there  to  what  it  is  here. 

Q.  Do  you  know  anything  about  that?    A.  No,  sir. 

Q.  Do  you  know  they  went  there  for  that  purpose?  A.  Yes, 
sir;  from  my  experience  talking  with  parties  who  were  con- 
tinually changing. 

Q.  About  this  company;  do  you  know  of  your  own  knowledge? 
A.  No,  sir;  I  do  not. 

Q.  Do  you  think  the  corporation  tax  is  too  high  here;  is  that 
rour  idea?  A.  I  think  the  tax  upon  all  personal  property  is 
altogether  out  of  proportion  to  what  it  should  be. 

Q.  And  yet  it  is  much  less  than  the  real  estate  tax,  is  it  not? 
A.  Same  rate. 

Q.  But  it  escapes  taxation;  the  property  that  is  in  the  city  — 
Dersonal  property  —  does  not  bear  its  just  proportion;  and  you 
think  that  it  should  bear  still  less?    A.  I  think  that  so  far  as  New 
York  city  is  concerned  there  should  be  no  such  tax. 

Q.  Would  you  increase  the  tax  upon  real  estate?  A.  That  is 
well  enough  as  it  stands. 

Q.  If  you  reduce  the  taxable  personal  property  your  idea  is 
;hat  there  would  be  more  of  it  remain  here  and  by  a  less  tax 
upon  personal  property  you  would  raise  more  money  for  State 
mrposes?  A.  I  would  guarantee  that  if  the  tax  was  removed 
Torn  personal  property  altogether,  and  a  small  tax  put  upon 
corporate  property,  that  in  less  than  ten  years  we  would  collect 
:our  times  as  much  as  we  collect  now  on. corporate  property,  and 
the  assessed  value  of  real  estate  would  run  up  to  f  2,000,000,000, 
without  increasing  the  present  rate. 


104 

Q.  Do  you  refer  to  the  county  of  New  York?    A.  Yes,  sir. 

Q.  You  don't  mean  that  generally?  A.  No,  sir;  I  am  talking 
about  the  city  and  county  of  New  York;  if  such  a  thing  was  done, 
that  the  receipts  we  are  entitled  to,  the  sinking  fund,  which 
amounts  to  ten  or  twelve  million;  we  could  raise  40,000,000  a 
year. 

Q.  Why  should  not  personal  property  pay  some  taxes?  A. 
They  will  pay  it  by  inviting  them  to  come  here. 

Q.  If  you  had  more  stringent  laws,  what  then?  A.  You  would 
drive  them  away  faster,  that  is  all. 

Q.  By  undertaking  to  collect  personal  property,  you  think  the 
city  and  county  is  going  to  the  demnition  bow-bowrs,  is  that  it? 
A.  Not  at  all;  we  would  not  reduce  our  tax  upon  real  estate;  it 
would  be  as  cheap  as  now,  and  we  would  have  so  much  wealth 
here  from  all  parts  of  the  world  it  would  more  than  compensate  it 
three  to  one. 

By  Mr.  Gifford. 

Q.  Would  not  such  a  condition  attract  capital  from  ill  over 
the  State?  A.  From  all  over  the  world. 

Q.  Then  wouldn't  it  damage  the  rest  of  the  State  while  bene- 
fiting your  city?  A.  No,  sir;  whatever  benefits  us  benefits  the 
rest  of  the  State. 

By  the  Chairman. 

Q.  What  effect  do  you  think  that  would  have  in  Chautauqua 
county?  A.  It  would  increase  the  real  estate  in  the  entire  State. 

Q.  Give  us  an  estimate?  A.  I  have  destroyed  all  my  records 
for  the  last  twenty-five  years;  I  hare  been  a  sort  of  star  witness 
on  every  kind  of  investigation  coming  up,  and  when  I  left  the 
office  I  destroyed  all  my  papers;  I  didn't  want  to  hear  anything 
more  about  it;  I  have  left  it  behind  me. 

By  Mr.  Creamer. 

Q.  You  made  a  statement  that  something  would  increase  the 
assessed  valuation  of  real  estate  to  two  thousand  millions;  what 
do  you  think  would  have  that  tendency?  A.  By  relieving  indi- 
viduals from  any  tax  upon  personal  property. 


105 

Q.  There  are  about  11,000  of  them  now?    A.  I  don't  care;  that 
would  bring  in  100,000  more;  we  have  chased  them  away. 
Q.  Driven  away  capital?    A.  Individual  capital. 
Q.  Mr.  Claflin  is  not  a  case  in  point;  he  has  not  been  chased 
away?    A.  He  might  have  a  residence  here. 

Q.  He  is  a  very  prominent  exile  so  far  as  New  York  is  con- 
cerned? A.  Very  well. 

Q.  For  a  number  of  years  they  have  had  personal  tax  laws  in 
Pennsylvania  and  Connecticut;  they  raise  on  corporations  alone 
in  Pennsylvania  enough  to  pay  their  State  taxes?  A.  I -recom- 
mended the  State  committee  that  was  sitting  at  the  Union  Square 
hotel,  on  Fourteenth  street  —  Mr.  Plunkitt  was  one  of  them  —  to 
follow  out  the  Pennsylvania  tax  law  by  taxing  corporations  upon 
their  gross  receipts. 

Q.  Has  that  had  an  injurious  effect  in  Pennsylvania?  A.  No, 
sir. 

Q.  They  collect  much  more  than  we  do  here?  A.  A  great  deal 
aore. 

Q.  Five  million  dollars  against  our  one?    A.  Yes,  «ir. 
Q.  That  shows  a  rather  healthy  state  of  affairs  as  regards  cor- 
porations?   A.  Yes,  sir. 

Q.  Why  can  not  we  have  the  same?  A.  We  are  not  located  the 
ame  as  Philadelphia;  remove  Jersey  or  connect  Jersey  to  New 
fork. 

Q.  It  is  a  matter  of  location  and  not  of  principle?  A.  It  is 
ocation;  I  am  talking  for  New  York  city. 

Q.  WTiat  would  you  suggest  that  will  give  us  taxes,  because  the 
government  must  have  taxes;  your  great  financial  center  needs 
aoney  to  support  it?  A.  Our  great  financial  center  is  the  best 
ity  in  the  world  where  property  can  be. protected  at  a  much 
ower  rate  than  any  other;  let  them  locate  here;  invite  them 
iere. 

Q.  Those  men  that  are  here,  and  who  are  accumulating  millions 
>y  being  untaxed;  should  not  they  pay  taxes?  A.  You  can  not 
inswer  those  questions  now,  when  you  have  silver  certificates 
U 


106 

and  government  bonds,  and  all  those  things,  allowing  those  people 
to  hold  those  things  over  night. 

Q.  Do  you  not  think  this  personal  property  that  has  .^rown 
up  in  your  day  that  had  no  existence  when  you  went  into  the 
tax  office,  but  materialized  50,000,000  during  your  administration 
should  contribute?  A.  What  property? 

Q.  Take  Western  Union  or  Manhattan?  A.  They  could  locate 
in  Jersey  City. 

Q.  Possibly  people  would  not  like  to  have  the  elevated  road  in 
Jersey  City?  A.  You  take  Western  Union,  you  could  drive  that 
away  if  you  wanted  to. 

Q.  Don't  you  suppose  a  rival  company  would  spring  up  here  in 
twenty-four  hours?  A.  Not  if  you  are  going  to  tax  them  to 
death. 

Q.  We  have  not  taxed  them  at  all;  is  there  any  danger  of  the 
Manhattan  Elevated  railway  leaving  this  city?  A.  They  can 
not. 

Q.  Then  why  should  it  not  be  taxed?    A.  It  is  taxed. 

•Q.  In  proportion  to  its  cash  capital?  A.  In  proportion  to  what 
it  cost. 

Q.  Is  it  taxed  in  proportion  to  what  it  would  sell  for  to-day? 
A.  Certainly  it  is. 

Q.  I  don't  see  any  reason  that  you  can  not  be  a  little  more 
frank.  A.  The  Court  of  Appeals  has  decided  that,  and  I  am  not 
going  to  criticize  their  decision. 

Q.  I  am  not  asking!  you  to  do  that;  should  not  this  property 
be  taxed  at  what  it  would  bring  in  the  market;  that  is  what 
your  successor  Mr.  Fietner  states?  A.  The  structure  is  taxed 
what  it  costs. 

Q.  Then  the  elevated  railway  is  taxed  what  it  cost?  A.  Yes, 
sir. 

Q.  But  the  Equitable  Life  building  is  taxed  what  it  would 
bring,  and  not  what  it  cost;  you  laid  down  a  precedent,  and  it» 
seems  they  have  followed  your  rule  since  you  left  the  office;  the, 
Equitable  building  is  assessed  what  it  would  bring  and  tho 
elevated  railway  what  it  would  cost?  A.  The'  Equitable  build- 


107 

ing  is  assessed  what  it  would  bring  in  proportion  to  the  assess- 
ments of  adjacent  property;  what  it  cost  by  the  different  altera- 
tions made  to  suit  their  business  —  their  improvements  down 
there  where  they  have  located  have  made  values  large  through 
the  second,  third  and  fourth  wards,  which  we  have  reaped  the 
benefits  of  ten  times  over. 

Q.  Should  not  those  men  who  have  accumulated  those  large 
amounts  in  your  day,  commencing  with  small  sums,  not  much 
over  $100,000,  that  has  run  up  to  millions  and  millions  —  would 
it  not  be  justice  to  the  people  of  the  city  and  State  to  require 
those  people  to  pay  or  contribute  a  small  moiety  —  some  percent- 
age of  their  vast  earnings?  A.  If  you  can  possible  make  a  law 
by  which  personal  taxation  will  be  so  light  that  it  will  be  no  bar 
to  our  prosperity,  that  it  will  invite  capital  here  and  hold  it 
among  us  I  would  be  in  favor  of  it  very  much,  but  when  you 
try  to  tax  a  thing  that  can  go  away  it  will  be  an  injury  to  us,  and 
if  you  can  hold  that  thing  here  it  will  be  a  benefit  and  assistance, 
then  you  had  better  try  to  hold  it  here. 

Q.  The  question  is  this,  that  where  you  see  property  increasing 
•year  after  year,  by  doubling  their  capital  stock,  based  upon  their 
Surplus  earningjs,  don't  you  think  it  should  be  taxed.?    A.  Then 
let  them  go  in  the  gross  receipts,  then  they  all  pay  their  share; 
the  millionaire  who  owns  those  things  pays  his  share. 
Q.  But  some  of  them  now  pay  nothing?    A.  You  can  not  reach 
hem ;  how  can  you  make  them  pay  under  the  law  ? 
Q.  Those  personal  tax  laws  have  been  changed  many  times 
rhile  you  were  commissioner?    A.  You  can  see  how  difficult  it 
when  the  first  suit  of  the  Williamsburgh  railway  v.  the  ciby 
f  Brooklyn,  nearly  compelled  them  to  take  out  their  plant  and 
heir  holding;    and  then  the  Twenty-third  Street  railroad  com- 
piled the  commissioners  to  take  that  and  take  only  the  assessed 
alue,  and  then  the  Union  Trust  Company  decision  came,  you  can 
ee  how  difficult  it  was. 

Q.  They  changed  the  law  while  you  were  a  commissioner,  did 
tiey  not?    A.  In  what  way? 


108 

Q.  I  asked  that  question?    A.  Not  while  I  was  commissioner;  no. 

Q.  While  you  were  in  the  office  the  law  was  changed? 
Yes,  sir. 

Q.  You  were  consulted  with  everything  in  connection  with  the 
office,  more  or  less?  A.  Not  on  personal  taxation. 

Q.  Not  on  personal  taxation?  A.  No;  I  was  always  opposed 
to  that. 

Q.  While  you  were  deputy?  A.  While  I  was  deputy  I  don't  think 
they  ever  consulted  me  after  Mr.  Andrews'  death;  the  other  com- 
missoners  didn't  think  I  was  worth  while. 

Q.  We  understand  here  that  it  is  the  deputy  that  makes  the 
assessment  on  personal  taxation?  A.  Well,  that  has  not  been  the 
custom  for  many  years. 

Q.  What  is  the  law?  A.  The  law  says  that  the  deputy  shall 
make  the  assessment  on  real  and  personal  property  within  the- 
confines  of  his  district,  but  we  appointed  a  deputy  at  large  for 
personal  property  and  gave  him  what  we  thought  discretionary 
power  to  make  the  assessments  in  every  ward. 

Q.  What  would  you  suggest  now  as  a  remedy  towards  reorgani- 
zation of  the  staff;  is  there  a  sufficient  staff  there  in  the  present 
office?  A.  There  is  not 

Q.  What  do  you  suggest  in  regard  to  the  system  that  prevails; 
what  would  you  suggest  as  regards  a  reorganization  of  any  depart- 
ment or  bureau  in  connection  with  that  office,  as  to  the  system? 
A.  The  system  is  all  right,  except  to  abolish  the  personal 
department 

Q.  Have  no  personal?  A.  The'  personal  department;  the  three 
commissioners  can  fairly  do  the  work,  and  no  less  than  three 
should  be  appointed ;  there  should  be  at  least  seventeen  to  twenty 
deputies,  and  they  should  be  fairly  paid. 

Q.  Seventeen  to  twenty?    A.  Yes,  sir. 

Q.  Divide  it  into  districts?  A.  Into  wards;  some  wards  are 
large  enough  for  two  deputies;  the  twelfth  ward,  for  instance, 
two  men  should  be  appointed  there  with  two  clerks. 

Q.  Where  there  are  but  thirteen  now  in  your  judgment  it 
would  be  better  to  have  seventeen  to  twenty?  A.  Yes,  sir. 


109 

Q.  Would  you  combine  the  personal  with  the  real  estate?  A.  I 
would  not  advise  anything  about  the  personal  assessment ;  I  would 
have  it  separate. 

Q.  Those  deputies  would  apply  to  real  estate?    A.  Yes,  sir. 

Q.  As  to  personal?  A.  I  would  have  sufficient  help;  the  personal 
department  as  it  carried  on  and  at  the  present  time  should  have 
five  men. 

Q.  Five  deputies?  A.  No;  one  deputy  with  one  assistant  and 
three  clerks. 

Q.  What  would  be  their  duty  as  regards  making  up  the*,  assess- 
ment-rolls? A.  One  would  have  charge  of  the  corporations  and 
the  other  three  should  have  charge  of  the  personal  assessment 
books;  the  other  should  have  charge  of  the  non-resident  personal 
book,  all  under  the  supervision  of  this  one  man,  of  course. 

Q.  Do  you  think  that  one  man  could  very  well  look  after  such 
an  immense  field?  A.  Yes,  sir. 

Q.  What  duty  would  you  prescribe  for  him  as  regards  correct- 
ing any  failure  to  have  the  names  on  the  books  that  were  off  a 
year  ago,  to  have  them  added  on?  A.  I  would  not  have  the  law 
changed  as  regards  that. 

Q.  I  mean  as  to  his  duty?    A.  Do  the  very  best  he  could. 

Q.  What  does  that  consist  of?    A.  Getting  all  the  information 

>m  the  different  directories,  business  firms  and  all  that. 

Q.  How  could  a  man  do  that?    A.  He  can  by  a  system  very 

Q.  Tell  us  how.    A.  I  could  not  tell  you;  it  is  a  matter  of  detail 
I  am  familiar  with ;  from  my  experience  I  only  say  I  think  it  can 
done. 

Q.  Then,  you  think  you  could  do  it  if  you  Avere  there?    A.  I 
ink  I  could,  and  I  think  others  could  do  it  as  well  as  I  can. 
Q.  Is  it  not  true  that  the  rolls  are  left  to  a  considerable  extent 
j | just  as  they  have  been  year  after  year?    A.  They  look  over  the 
rds  in  different  papers;  they  have  men  pretty  well  drilled 
n  regard  to  that;  whatever  information  is  to  be  obtained  they 
*o  and  get  it;  of  course,  dealing  with  individuals,  you  have  to 


110 


deal  with  them  lightly,  or  they  will  take  wings  and  fly  like  the 
rest  of  them. 

Q.  As  regards  property  exempt  under  the  law,  your  attention 
has  been  called  to  that?  A.  Yes,  sir. 

Q.  Was  any  effort  made  while  you  were  commissioner  to  per 
feet  the  law?  A.  I  have  several  times  protested  in  regard  to 
resolutions  introduced  about  tax  matters,  because  I  have  alwayn 
thought  that  patching  this  old  machine  up  with  a  rivet  here  and 
a  rivet  there  was  doing  us  more  damage;  I  have  been  in- favor 
for  the  last  twenty  years  of  revising  the  tax  laws  of  the  State, 
but  in  looking  back  I  can  not  see  where  we  have  made  any 
progress  by  any  laws  that  have  been  made. 

Q.  You  did  not  have  anything  to  do  with  the  making  of  those 
laws?  A.  I  say,  in  looking  back,  I  can  not  see  that  it  has  been 
of  any  benefit. 

Q.  Has  the  department  done  anything?  A.  If  you  will  remem- 
ber, Mr.  George  H.  Andrews,  from  1867  to  the  time  of  his  death, 
never  left  a  year  go  by  without  an  appeal  to  the  Legislature 
showing  the  condition  of  affairs  here  on  account  of  our  tax  laws. 

Q.  In  what  respect  did  he  complain  of  them?  A.  The  manner 
in  which  the  laws  were  administered  here,  in  which  they  were 
obliged  to  be  adminstered  under  the  law. 

Q.  As  regards  real  estate  or  personal?  A.  Personal  and  cor- 
porate property. 

Q.  He'  kept  complaining?    A.  All  the  tune. 
Q.  What  was  he   complaining   of   specially  ?    A.  About 
manner  in  which  he  thought  capital  was  being  driven  out  of  the 
city. 

Q.  You  and  he  agreed?    A.  On  many  points  we  did. 

Q.  He  was  always  complaining  that  capital  was  being  driven 
away?  A.  Yes,  sir. 

Q.  Has  the  result  proved  that  he  was  right?    A.  Yes,  sir. 

Q.  It  is  rather  a  healthy  city,  financially?    A.  Ves,  sir. 

Q.  He  was  not  a  good  prophet?  A.  I  think  he  was  in  regard  to < 
the  stand  he  took,  about  forcing  capital  out  of  the  city. 


Ill 

Q.  Real  estate  that  has  been  taxed  has  increased,  and  personal 
property  not  taxed  at  all  has  decreased?  A.  Yes,  sir. 

Q.  Therefore,  Mr.  Andrews  could  not  have  been  a  very  good 
prophet?  A.  Yes,  sir;  he  was. 

Q.  Real  estate  has  doubled  since  the  time  he  was  a  com- 
missioner? A.  Yes,  sir. 

Q.  And  it  has  been  taxed?    A.  Yes,  sir. 

Q.  And  personal  property  has  decreased,  and  that  is  not  taxed 
at  all;  why  is  that?  A.  Because  the  law  allows  it  to  be  decreased; 
it  allows  it  to  be  changed;  people  are  becoming  more  clever  every 
day;  for  many  years  it  was  a  tax  upon  ignorance  and  honesty; 
that  day  has  gone  by. 

Q.  This  personal  tax  is  a  tax  upon  ignorance  and  honesty? 
A.  Yes,  sir;  and  has  been  for  many  years. 

Q.  Should  not  that  be  abolished  by  changing  the  law?  A. 
Abolish  it  altogether. 

By  Mr.   Coggeshall. 

Q.  Has  capital  been  driven  out  of  the  State,  do  you  think,  by 
e  tax  upon  personal  property  alone,  or  has  it  been  more  on 
4  {account  of  the  corporation  tax,  so  called?    A.  Both. 

Q.  Has  it  not  been  more  by  reason  of  the  corporation  tax  that 
capital  has  been  driven  out  of  the  State?    A.  Not  out  of  the 
State  altogether,  but  it  has  partially  out  of  the  State;  it  seems 
me  we  have  suffered  severely  on  account  of  the  taxes;  indi- 
7iduals  have  located  outside  of  the  county;  they  come  here  and 
in  the  hotels  in  the  winter;  we  have  increased  the  hotels 
^Jrwenty  times  to  what  it  was  twenty  years  ago,  and  apartment 
louses  one  hundred  per  cent. 

Q.  Do  you  attribute  it  to  that?    A.  I  do;  millionaires  don't 
ome  here. 

Q.  Is  it  not  a  desire  to  go  out  to  the  suburban  country?    A. 
b,  sir;  they  can  make  better  arrangements  in  the  country  than 
ere;   they   can  make  no   arrangements   here   except   through 
davit. 

Q.  In  other  words,  they  go  to  the  suburban  towns  and  over  to 
ew  Jersey  to  escape  taxation  on  their  personal  property?    A.  I 
certain  of  it 


112 

Q.  Do  you  think  that  is  right?  A.  It  is  not  right;  I  want  to 
have  the  law  changed  to  hold  them  here,  so  that  they  can  build 
their  residences  here. 

Q.  Where  is  there  a  city  or  State  that  imposes  no  tax  on  per- 
sonal property?  A.  I  don't  know  of  any,  but  we  can  afford  to 
do  it  here. 

Q.  I  think  it  will  be  a  mighty  dangerous  experiment?  A.  That 
is  where  I  differ  with  you. 

Q.  Great  minds  sometimes  do  differ?  A.  I  think  we  are  more 
prosperous  every  way  than  any  other  city  in  the  United  States. 

Q.  What  do  you  say  as  to  the  prosperity  of  this  great  metropolis 
compared  with  any  other  city  in  the  union?  A.  I  think  we  are 
greater. 

Q.  Have  you  not  increased  as  rapidly  as  the  city  of  Philadel- 
phia ?  A.  More  rapidly. 

Q.  Are  you  not  satisfied  with  the  growth  of  New  York?  A. 
Not  in  comparison  with  its  natural  advantages. 

Q.  We  are  getting  along  better  than  the  others?  A.  Why 
shouldn't  we? 

Q.  We  had  better  let  well  enough  alone,  and  those  fellows  that 
are  so  unpatriotic  that  they  want  to  leave  New  York  for  the 
purpose  of  obviating  the  duties  that  rest  upon  them  as  citizens 
in  helping  to  pay  to  support  the  government  of  the  city,  I  think 
we  had  better  let  them  go?  A.  Then  stop  the  subject  of  agita- 
tion on  this  subject  of  taxation. 

Q.  You  object  to  the  agitation;  if  the  people  stopped  agitation 
you  would  think  we  were  all  right?  A.  No,  sir;  I  say  we  could 
do  better  to  bring  capital  back  here  as  long  as  we  can  not  tax 
it;  we  would  all  benefit  by  their  residence  here. 

Q.  If  you  take  the  tax  off  personal  property?  A.  Put  it  on  the 
buildings. 

Q.  When  you  go  up  the  State,  how  will  that  affect  the  farms; 
that  would  throw  the  burden  upon  the  farms,  would  it  not?  A. 
It  would  make  it  a  little  heavy,  but  at  the  same  time  our  values 
would  increase  so  much  more  rapidly. 

Q.  You  would  increase  here  to  the  detriment  of  the  people  in  the 
country?  A.  Not  to  their  disadvantage. 


113 

Q.  Most  assuredly  it  would  be  to  their  disadvantage  if  per- 
sonal property  was  exempted?  A.  The  small  amount  we  lost 
in  personal  property  would  be  made  up  in  the  increase  in  value. 

Q.  How  about  the  country?  A.  Then  put  it  upon  us;  we  can 
afford  to  do  it. 

Q.  It  is  all  right  as  a  theory,  but  in  the  language  of  Grover, 
you  would  be  confronted  with  a  condition;  if  people  found  they 
were  required  to  pay  the  local  taxes  in  Oneida  county  they  w«  Mild 
remonstrate;  another  thing,  I  don't  believe  you  could  pass  a  law 
that  the  Court  of  Appeals  hold  constitutional?  A.  What  is 
the  small  local  tax  now  compared  to  what  it  was  in  1865  to  1873 ; 
what  is  the  small  local  tax  in  the  different  counties? 

Q.  What  is  the  relative  value  of  real  estate  in  the  country 
now  compared  with  then?  A.  Two  or  three  times  over. 

Q.  It  is  at  least  fifty  per  cent  less?  A.  I  mean  the  assessed 
value  has  been  raised. 

Q.  And  the  actual  value  has  been  decreased?  A.  In  certain 
farming  countries  it  has;  our  city  debt  is  now  very  low. 

Q.  We  ought  to  take  care  of  ourselves  by  taxing  those  cor- 
porations; your  city  pays  a  large  share  of  taxes  because  she  is 
wealthy?  A.  Yes,  sir;  and  she  would  be  more  wealthy  if  the 
law  was  changed;  that  thing  has  been  gone  over  for  twenty 
years;  we  have  shown  that  our  proper  proportion  was  twenty- 
eigjht  instead  of  thirty-eight. 

Q.  What  do  you  think  of  the  listing  system?  A.  I  atn  opposed 
to  it;  it  would  drive  people  away  to  other  States;  it  has  hurt 
some  of  the  best  citizens  of  Philadelphia. 

Q.  You  mean  the  wealthy  citizens?    A.  Yes,  sir. 

Q.  Are  they  the  best  citizens?  A.  People  who  are  prosperous 
are  generally  the  best  people. 

Q.  You  estimate  a  man's  comparative  merit  by  the  amount  of 
money  he  owns?  A.  Not  at  all,  but  a  man  who  works  up  from  a 
poor  boy  and  is  prosperous,  I  think  he  is  a  good  man. 

Q.  Should  he  not  help  to  pay  taxes?  A.  They  all  help,  but  they 
don't  want  to  be  continually  picked  up  and  fired  at  all  the  time. 
15 


1U 

Q.  If  this  law  has  been  in  vogue  in  the  State  of  Pennsylvania, 
Massachusetts  and  Ohio  and  elsewhere  for  several  years  and  has 
been  successful,  why  do  you  object  to  it?  A.  Because  in  every 
one  of  those  places  you  get  the  report  of  the  tax  gatherer  and  he 
will  tell  you  that  they  are  losing  the  best  quality  of  their  people; 
look  at  the  result  in  Chicago. 

Q.  Chicago  seems  to  be  all  right;  you  say  that  the  listing 
system  is  driving  wealth  out  of  the  State  of  Illinois?  A.  It  is 
claimed  so  by  those  who  are  administering  the  laws. 

Q.  You  claim  here  that  taxing  personal  property  drives  wealth 
out  of  the  State?  A.  Yes,  sir. 

Q.  Now,  what  further  remedy  would  you  suggest  excepting  to 
leave  taxation  entirely  off  personal  property  and  put  it  on  to  real 
estate?  A.  In  the  first  place,  separate  New  York  from  those 
other  States;  don't  compare  us  to  Philadelphia  or  Boston  or 
Chicago;  they  are  not  in  it  with  us  at  all,  providing  you  give  liberal 
laws. 

Q.  They  are  no*  in  it  with  us?  A.  No,  sir;  not  even  with  all 
the  disadvantages  we  labor  under  in  repard  to  capital;  but  it 
seems  to  me  when  you  find  the  best  class  of  people  going  out,  and 
two  classes  coming  here,  one  living  in  hotels  and  apartments  and 
the  other  in  tenements,  we  are  losing  our  best  people;  the  people 
in  hotels  all  live  in  the  country  and  have  then*  mansions  and  they 
take  a  suite  of  rooms  when  they  live  here. 

Q.  If  you  listed  them  you  could  reach  them?  A.  They  would 
go  to  Europe  then. 

Q.  Do  you  think  New  York  would  be  absolutely  deserted?  A. 
No,  sir;  there  is  nothing  that  would  destroy  New  YorK. 

By  Mr.  Creamer. 

Q.  Bank  shares,  they  pay?    A.  They  do. 

Q.  Any  of  them  run  away?    A.  No. 

Q.  That  IB  a  fair  criterion,  is  it  not,  as  to  what  effect  taxation 
would  have  on  citizens?  A.  Of  course. 

Q.  A  majority  of  our  bank  presidents  are  intelligent  citizens 
and  reputable  citizens?  A.  Certainly. 


115 

Q.  Isn't  that  a  fair  criterion  to  show  that  it  is  not  oppressive? 
A.  Where  does  it  come  from;  it  comes  from  all  over  the  world. 

Q.  It  shows  prosperity  in  the  city  of  New  York?  A.  I  know 
it  does,  but  it  comes  from  all  over  the  world;  the  depositors 
don't  all  live  in  New  York. 

Q.  Now,  during  the  time  of  your  experience  as  city  official  the 
prosperity  of  the  city  has  increased,  and  you  have  had  a  fair 
opportunity  to  judge,  you  have  seen  this  city  grow  up  in  its  various 
sections,  east  and  west  and  north ;  have  you  not  noticed  a  remark- 
able increase  in  population  per  square  mile  in  certain  ^locations 
of  this  city?  A.  Yes,  sir. 

Q.  Owing  to  this  taxation  on  real  estate?  A.  Not  altogether 
to  that,  owing  to  rapid  transit. 

Q.  The  rapid  transit  saved  the  population  from  becoming  more 
dense?  A.  It  is  pretty  hard  to  become  more  dense. 

Q.  It  has  during  your  term  as  tax  commissioner?    A.  Yes,  sir. 

Q.  How  as  regards  those  people  that  you  said  are  leaving  the 
city  owing  to  personal  taxes;  how  many  are  compelled  and  dis- 
possesed  from  their  residences  on  account  of  inability  to  pay  the 
high  rents  that  the  high  taxes  on  real  estate  require;  are  you 
aware  that  the  records  show  that  there  were  30,000  people  dis- 
possessed in  this  city  last  year  on  account  of  non-payment  of 
rent,  the  landlord  having  to  have  his  taxes;  did  you  ever  give  that 
branch  of  the  subject  any  thought , while  you  were  looking  after 
the  interests  of  those  successful  people?  A.  I  was  not  looking 
after  the  interests  of  those  successful  people. 

Q.  I  mean  as  you  noticed  those  people  growing  richer  and  richer 
you  certainly  must  have  noticed  that  this  system  of  dispossession 
for  non-payment  of  rent  owing  to  high  rent  and  high  taxes  was 
affecting  a  large  class  of  people  who  can  not  help  themselves?  A. 
Unfortunately  I  did  not  know  there  was  as  many  as  30,000;  I 
didn't  know  that  those  people  came  into  the  subject  of  taxation 
at  all. 

Q.  What  people  ?    A.  Those  people  dispossessed. 

Q.  Who  said  they  were?     A.  You  spoke  about  it. 


116 

Q.  They  are  dispossessed  because  they  don't  pay  their  rent;  you 
know  that  they  assess  land  on  which  those  double  deck  tenements 
have  been  constructed  and  have  been  increased  year  after  year, 
and  that  system  is  increasing  here  owing  to  the  unequal  system  of 
assessing  the  wealth  of  this  county.  (No  answer.) 

By  the  Chairman. 

Q.  You  heard  Commissioner  Feitner  say  that  he  favored  the 
divorcing  of  the  collection  of  State  and  local  taxes?  A.  Yes,  sir. 

Q.  What  do  you  recommend  in  that  regard?  A.  I  think  that 
would  be  a  step  in  the  right  direction. 

Q.  Then  you  recommend  that  there  should  be  a  eparation?  A. 
Yes,  sir. 

Q.  That  would  do  away  with  this  question  of  equalization?  A. 
Yes,  sir;  and  this  friction  year  after  year  in  regard  to  counties. 

Q.  Now,  one  of  the  questions  that  this  committee  is  considering 
is  not  so  much  what  can  be  done  under  the  present  law, 
but  what  recommendations  can  make  as  to  modifications  or  amend- 
ments to  the  existing  law;  I  understand  you,  I  think,  to  recom- 
mend that  you  would  favor  the  repeal  of  the  law  which  justifies  the 
assessment  of  personal  property  altogether?  A.  In  the  hands 
of  individuals. 

Q.  But  not  as  to  corporations?    A.  No,  sir. 

Q.  Do  you  intend  that  that  recommendation  should  apply 
generally  throughout  the  State  of  New  York,  or  only  to  the  county 
of  New  York?  A.  It  ought  to  apply  throughout  the  State. 

Q.  In  your  opinion,  you  think  it  would  have  a  beneficial  result 
throughout  the  State?  A.  As  far  as  New  York  'is  concerned,  I  am 
certain,  and  I  think  it  would  be  a  benefit  throughout  the  State. 

Q.  Then,  in  your  opinion  as  a  tax  commissioner,  do  you  think 
that  personal  property  in  the  hands  of  individuals  in  the  city  of 
New  York  has  borne  a  fair  share  of  the  expenses  of  government? 
A.  Not  a  fair  share,  but  it  has  borne  all  we  could  get  under  the 
present  law;  there  is  no  place  that  the  tax  commissioners  have 


117 

striven  so  hard  to  obtain  the  tax  as  they  have  in  New  York  on 
personal  property  in  the  hands  of  individuals. 

Q.  Then,  you  think  that  if  the  policy  of  taxing  personal  prop- 
erty is  to  continue,  that  the  present  law  is  defective?  A.  I  am 
certain  of  it. 

Q.  In  what  respects  do  you  think  the  present  law  defective 
so  far  as  it  applies  to  the  assessment  of  personal  property?  A. 
I  am  so  utterly  opposed  to  any  tax  upon  personal  property  that 
even  if  I  knew  some  suggestions  to  make  by  which  you  could 
take  and  oppress  people  a  year  or  two  by  more  taxes 'upon  per- 
sonal property,  I  don't  know  as  I  would  suggest  it  to  you,  because 
it;  would  be  injurious  in  the  end;  you  take  and  put  a  tax  upon 
mortgages;  twenty-four  hours  after  the  tax  would  be  put  upon 
mortgages,  every  blank  would  be  filled  out  that  the  party  borrow- 
in-  :  lie  money  should  pay  the  tax,  and  it  would  be  only  an  oppres- 
sion upon  the  poor  man. 

Q.  Aside  from  your  personal  view;  suppose  it  should  continue 
to  be  the  policy  of  the  state  to  assess  personal  property,  in 
whtit  respect  do  you  think  the  law  is  defective  now?  A.  The 
value  of  money  in  New  York  will  not  allow  it  to  come  here  and 
have  a  personal  tax  upon  it  at  the  same  rate  as  real  estate; 
you  can  make  the  law  so  light  that  it  will  come  here  instead 
of  going  away;  you  can  bring  it  here  and  make  the  tax  so  light 
that  it  will  attract  it  here,  of  that  I  am  certain;  perhaps,  one- 
tenth  of  (me  per  cent,  or  even  one-fourth  of  one  per  cent,  and 
inside  of  ten  years  you  will  collect  ten  times  the  amount  that 
you  collect  to-day  on  personal  property. 

Q.  You  still  hold  to  answering  upon  the  basis  of  your  personal 
view;  suppose  that  the  State  should  continue  its  policy  of  assess- 
ing personal  property;  it  is  conceded  now  that  under  the  law  it 
can  not  be  reached;  what  suggestions  have  you  got  to  make, 
if  any,  as  to  how  the  law  should  be  amended  in  order  to  reach 
this  personal  property?  A.  I  would  have  to  write  that  down; 
1  would  have  to  embody  that  in  a  note;  I  would  have  to  go  over 
that  very  carefully. 

Q.  Suppose  the  State  should  continue  its  policy  as  to  personal 
property,  would  you  recommend  an  amendment  to  the  law  so 


118 

as  to  disallow  indebtedness  —  claims  for  indebtedness?  A.  I 
think  I  would  prefer  the  law  as  it  has  been  changed  lately,  because 
it  was  disgusting  the  way  the  la.w  was  before,  by  which  people 
could  go  down  in  twenty-four  hours  and  charge  their  assets,  go 
up  and  get  their  assessments  oif,  which  was  sustained  by  the 
Court  of  Appeals;  the  law  ought  to  stand  as  it  has  been  amended 

By  Mr.  Quigley. 

Q.  When  was  it  amended?    A.  This  last  year,  I  think. 

Q.  What  is  the  effect  of  that  amendment?  A.  I  don't  know; 
I  have  not  been  in  tke  tax  otfice 

Q.  You  say  that  the  reason  this  capital  is  driven  out  of  the 
State  is  because  of  our  existing  law?  A.  Yes,  sir. 

Q.  Is  it  not  virtually  the  same  law  we  had  in  1857  ?    A.  Yes,  sir. 

Q.  })o  you  mean  to  s'ay  that  capital  has  beon  driven  on*:  because 
of  that  law  of  1857?  A.  The  laws  of  1857. 

Q.  Didn't  they  live  under  that  law  for  a  number  of  years  in 
this  State?  A.  We  have  changed  so  wonderfully  in  our  business 
and  wealth  has  accumulated  so  rapidly  since  the  war. 

Q.  When  was  the  change  so  wonderful  that  they  had  to  get 
out?  A.  In  1869,  when  they  came  here;  we  never  knew  the 
damages  of  a  personal  tax  until  then. 

Q.  Is  it  not  more  because  of  the  effort  of  the  authorities  to 
enforce  the  law  that  they  get  out?  A.  Yes,  sir. 

Q.  Why  was  that  movement  made  in  1869?  A.  Because  the 
papers  announced  that  so  and  so  was  worth  so  many  millions, 
driven  from  California  by  this  man  Dennis  Kearney. 

By  Mr.  Creamer. 

Q.  How  many  names  were  added  to  the  books  that  year  that 
had  previously  escaped?  A.  I  could  not  tell  you  how  many 
names;  we  took  the  newspapers  that  year,  1879  and  1880;  from 
the  information  received  all  those  men  were  placed  upon  the 
records;  they  only  stayed  there  a  year. 

Q.  Is  it  not  true  that  on  several  occasion  special  corpora- 
tions and  large  capitalists  have  had  those  laws  amended  to  suit 


119 

themselves  at  Albany;  and  that  that  does  not  reach;  whj  is 
it  this  State  is  so  many  years  behind  in  its  tax  laws,  and  it  seems 
to  be  impossible  to  do  any  thing  with  them;  is  it  not  owing  to 
those  immense  corporations  who  have  such  power  to  prevent  it? 
A.  The  only  law  that  has  been  changed  that  has  been  detri- 
mental to  the  city's  interest  at  large  was  the  law  saving  the 
capital  of  fire  companies;  as  soon  as  I  saw  that  bill  I  went  to 
the  governor;  I  appealed  to  him  and  he  sent  to  the  attorney-gene- 
ral; he  said  I  was  wrong  as  to  the  construction  of  the  bill,  but  the 
Court  of  Appeals  declared  that  the  $72,000,000  was  not  liable  to 
taxation. 

Q.  All  the  legislation  that  has  been  proposed  to  bring  them 
within  the  limit  of  taxation  those  corporations  that  were  exempt 
when  in  their  infancy  was  thirty  years  ago,  and  every  time 
there  has  been  a  movement  made  at  the  State  capitol  to  change 
the  law  as  regards  such  corporations  their  attorneys  succeeded  in 
defeating  the  law?  A.  That  I  do  not  know;  I  went  to  Albany  on 
taxation  matters. 

Q.  Have  you  not  an  opinion  about  this  thing  as  to  the  way  this 
gross  inequality  grew  up?  A.  Not  a  thing;  I  was  rather  liberal 
in  regard  to  those  mutual  corporations;  about  that  $72,000,000, 
three-fourths  of  the  money  that  flow  into  their  assets  here  come 
from  people  outside  of  the  State. 

Q.  I  mean  the  people  who  are  already  in  the  State  and 
flourishing?  A.  I  mean  the  great  men  who  support  those  cor- 
porations, that  come  here  and  build  their  elegant  buildings 
and  raise  our  values;  I  would  like  to  see  a  thousand  more  come 
whether  they  are  moral  or  not 

Q.  What  is  your  opinion  on  this  inheritance  tax  question?  A. 
I  have  not  given  that  any  thought. 

Q.  In  your  connection  with  the  taxation  of  this  city  you  must 
have  an  opinion?  A.  No;  it  was  not  in  existence  when  I  was 
in  the  tax  office  at  all;  I  understand  it  is  $500  and  $10,000;  I 
understand  those  are  the  sums;  I  have  not  bothered  about  it  at 
all;  in  fact,  I  have  left  all  matters  municipal  go  behind. 


120 

Q.  All  you  wanted  was  the  benefit  of  your  great  experience? 
A.  I  am  willing  to  do  anything. 

The  committee  then  went  into  executive  session. 

On  motion  the  committee  adjourned  to  meet  in  the  Superior 
Court,  Part  2,  on  Wednesday,  December  21,  1892,  at  1.30  p.  m. 

New  York,  Superior  Court,  Part  2, 
December  21,  1892. 

The  committee  met  pursuant  to  adjournment. 
The  committee  was  called  to  order  by  the  chairman. 

George  S.  Coleman,  a  witness  called,  being  duly  sworn,  testified 
as  follows: 

By  Mr.  Creamer. 

Q.  You  were  formerly  connected  with  the  corporation  coun- 
sel's office?  A.  Yes,  sir. 

Q.  During  what  period?  A.  From  October,  1885,  to  the  1st 
of  June,  1892. 

Q.  October,  1885,  to  the  lirst  of  June,  1892?    A.  Yes,  sir. 

Q.  What  was  the  branch  of  duty  in  the  corporation  counsel's 
office  that  you  occupied?  A.  I  had  charge  of  all  matters  relat- 
ing to  taxing,  which  included  advising  the  commissioners  of 
taxes,  or  advising  the  heads  of  city  departments,  under  the 
direction  of  the  corporation  counsel,  and  of  representing  the  city 
in  tax  litigations. 

Q.  Had  you  exclusive  charge,  or  did  all  matters  concerning 
taxation  in  regard  to  this  county  and  its  relations  with  the 
State  come  within  your  observation?  A.  I  think  so;  in  some 
cases  there  were  other  counsel  employed,  but  in  those  instances 
I  worked  with  them. 

Q.  During  that  period  there  was  legislation  on  the  subject  of 
taxation?  A.  Yes,  sir. 

Q.  Each  year  did  that  legislation  take  place,  and  what  v/as  the 
character  of  it?  A.  I  could  not  say  offhand;  I  know  there  were 
tax  bills  introduced  almost  every  year,  and  the  connection  of  the 


121 

office  with  them  would  be  generally  only  in  those  cases  that 
apparently  affected  the  city  of  New  York;  the  representative  of 
the  law  department  at  the  Legislature  would  submit  to  the 
corporation  counsel  a  bill  as  soon  as  printed,  and  the  corporation 
counsel  would  refer  it  generally  to  me  to  see  whether  it  aifecied 
New  York  county;  if  it  did,  why  we  would  consult  as  to  vhether 
or  not  it  would  seem  for  the  interest  of  the  city  to  favor  or  oppose 
the  bill,  and  if  it  did  not  affect  this  county  we  paid  no  attention 
to  it. 

Q.  During  the  year  1885,  do  you  remember  of  any  bill  emanating 
from  your  office  to  send  to  Albany  the  following  session  —  in  the 
following  year?  A.  I  don't  recall  now;  I  went  there  in  October, 
and  the  gentleman  whom  1  succeeded  was  taken  ill,  and  threw 
the  work  of  the  department  on  my  hands;  I  have  no  recollection 
of  legislation. 

Q.  We  will  take  the  first  year  of  your  administration  of  the 
duties  of  the  tax  branch  of  the  corporation  counsel's  office  to  this 
city;  what  do  you  remember  as  being  your  first  experience?  A. 
The  first  bill  that  I  recollect  now  was  an  act  in  1886  with  respect 
to  insurance  companies. 

Q.  Fire  and  marine?  A.  Fire  and  marine  insurance  coin 
panies,  domestic  and  foreign. 

Q.  Did  that  cover  life  insurance?     A.  No;  I  think  not. 

Q.  Fire  and  marine  in  1886?  A.  Fire  and  marine;  I  think  it 
was  chapter  679  of  the  Laws  of  1886 ;  it  regulated  the  taxation  of 
those  companies,  and  took  away  the  right  of  the  municipality 
to  tax  anything  except  real  estate. 

Q.  Previous  to  that  the  municipality  had  the  power  to  tax 
them  the  same  as  other  personal  property?     A.  Yes,  sir;  the  sam«. 
as  other  corporations;  it  had  the  right  to  tax  the  capital  slock. 

Q.  It  affected  the  insurance  companies  of  the  entire  State?  A. 
Yes,  sir;  that  affected  all  of  them. 

Q.  Did  that  bill  emanate  from  your  office?  A.  No,  air;  but 
it  was  submitted  to  the  office,  and  a  suggestion  made  with  refer- 
ence to  it.  , 

Q.  Who  submitted  it  to  your  office?    A.  I  do  not  know;  but  I 
do  know  that  it  was  submitted  to  me. 
16 


122 


Q.  By  whom?  A.  By  Mr.  Francis  M.  Scott,  who  at  that  time 
had  charge,  I  think,  of  the  law  department  interests  at  Albany. 

Q.  Well,  what  was  done  in  connection  with  it?    A.  I  remem 
making  a  suggestion  to  put  in  three  words  in  that  bill,  the  wo 
"  for  State  purposes,"  which  would  remove  any  doubt  as  tc 
whether  or  not  we  could  tax  those  companies  legally. 

Q.  On  real  estate?  A.  If  the  words,  "for  State  purposes," 
had  been  put  in  in  a  certificate,  under  the  decision  of  the  Court  of 
Appeals,  which  was  known  at  that  time  it  would  show  the  inten- 
tion of  the  Legislature  to  allow  the  State  and  county  to  tax  those 
corporations  just  a*  before  on  their  capital  stock;  the  only  differ- 
ence would  have  been  that  they  would  have  been  taxed  at  a 
lower  rate,  because  their  franchise  was  being  taxed,  but  if  those 
words  were  not  in  it  might  leave  doubt  as  to  whether  or  not  the 
Legislature  intended  us  to  tax  anything  except  the  real  estate, 
because  the  provisions  were  very  sweeping. 

Q.  Do  you  remember  who  introduced  the  bill?  A.  No,  sir;  I 
simply  saw  the  printed  proof  as  it  came  from  Albany. 

Q.  Did  you  ascertain  how  much  of  a  revenue  the  city  was 
to  lose  by  the  passage  of  such  an  act?  A.  Only  in  a  general 
way;  I  knew  at  that  time  what  the  insurance  companies  were 
assessed  at;  it  was  over  $50,000  a  year  —  this  tax;  the  tax 
would  be  something  more  than  $50,000  a  year. 

Q.  Well,  what  was  done  in  connection  with  it  by  your  depart- 
ment? A.  I  think  Mr.  Scott  called  the  matter  up  before  the 
committee  that  had  charge  of  the  bill  and  wanted  those  words 
inserted;  that  of  course  is  purely  hearsay;  my  recollection  is  that 
he  made  that  statement  to  the  committee  and  it  was  represented 
that  the  words  were  not  necessary;  that  it  was  not  the  intention 
of  the  act  to  exempt  those  companies  from  local  taxation  on  their 
capital,  and  that  even  if  those  words  were  not  put  in,  the  result 
would  be  as  they  intended;  my  impression  then  is  that  the  billl 
went  through;  it  was  passed  by  both  Houses,  signed  by  the 
Governor,  and  that  then  there  was  considerable  criticism  through 
the  newspapers  by  the  commissioners  of  assessments  here;  it  got 
into  the  press  of  the  city  and  it  was  called  to  the  attention  o 
the  Governor  and  the  Governor  submitted  the  question  to  the 


123 

Attorney-General;  the  Attorney-General  wrote  quite  a  long 
opinion  stating  that  it  did  not  affect  local  taxation,  and  that  I 
believe  for  a  time  quieted  the  apprehension;  that  was  the 
opinion  of  the  Attorney-General,  but  it  was  since  overruled  by  the 
Court  of  Appeals  four  years  ago,  so  that  a  few  years  ago  those 
companies  were  assessed  when  by  the  court's  construction  of  the 
law  there  was  no  authority  to  assess  them. 

Q.  Then  the  Attorney-General  was  wrong?    A.  Ye^  sir. 

By  the  Chairman. 

Q.  What  act  was  that?  A.  I  think  it  is  chapter  679  in  relation 
to  marine  insurance. 

By  Mr.  Creamer. 

Q.  During  your  administration — or  the  subsequent  incumbency— 
of  your  position  in  the  corporation  counsel's  office,  what  other 
matter  of  importance  was  your  office  consulted  in  relation  to? 
A.  Legislation? 

Q.  Yes,  sir;  in  reference  to  this  subject  of  taxation?  A.  I 
might  say  the  act  of  1886  was  modified  in  1891  so  as  to  affect  of 
the  decision  of  the  Court  of  Appeals. 

By  Mr.  Guenther. 

Q.  To  what  extent?  A.  By  putting  in  the  words  "  for  State 
purposes." 

Q.  Then  you  can  tax  them  now?  A.  You  can  tax  them  now; 
I  can  not  recall  now  specifically  the  matters  that  were  introduce] 
for  the  purpose  of  legislation;  I  simply  thought  from  time  to 
time,  bills  would  be  submitted,  and  I  would  make  a  memorandum 
in  pencil,  and  either  send  them  to  the  corporation  counsel  or 
confer  with  him,  personally,  or  with  the  party  who  had  charge  of 
legislative  matters  for  the  law  department  at  Albany;  I  do  not 
now  recall  the  particular  acts. 

By  Mr.  Creamer. 

Q.  What  has  been  the  experience  of  your  department  —  the 
corporation  counsel's  office  —  representing  tax  office  affairs  as  far 


124 

as  the  interests  of  this  mumcipality  is  concerned  as  to  the  pas- 
sage of  bills  affecting  the  interests  of  this  city  in  connection  with 
its  system  of  taxation?  A.  Well,  I  have  not  really  had  much 
practically  to  do  with  that. 

Q.  Well,  outside  of  this  act  of  1886  you  do  not  remember  any 
other  legislation  in  relation  to  this  question?  A.  I  presume  I 
could;  I  presume  I  could  go  over  my  memoranda  and  over  the 
statute  and  find  others  that  have  been  passed,  but  I  do  not  recall 
any  other. 

Q.  I  want  to  ascertain  whether  any  effort  has  been  made 
on  the  part  of  the  local  authorities  through  the  office  that  you 
were  connected  with  to  change  a  universally  admitted  weakness  of 
the  laws  on  taxation;  what  effort,  if  any,  has  been  made  on  the 
part  of  the  taxation  branch  of  the  corporation  counsel's  office  to 
bring  about  a  change,  if  any  —  whether  your  movements  in  that 
direction  have  been  countenanced  in  Albony  at  the  State  capitol, 
and  what  remedy  there  is  in  the  future?  A.  I  can  not  answer  that 
very  thoroughly,  as  I  said  before,  my  personal  connection  with  those 
matters  was  only  In  cases  where  specific  matters  were  submitted  to 
me;  my  duties  there  were  such  that  they  required  nearly  all  my 
time,  in  fact>  quite  all  my  time  in  the  particular  things  I  had  in 
hand;  I  do  know  that  in  1885  the  Consolidation  Act  was  amended 
with  reference  to  the  method  of  reviewing  the  methods  of  taxa- 
tion, so  as  'to  make  a  differences  between  the  method  of  this 
county  and  other  counties  in  the  State  in  this  respect;  the  law 
of  1888,  chapter  69,  provides  for  a  certiorari  to  review  illegality, 
inequality  or  error;  now,  in  the  county  of  New  York,  if  people 
were  permitted  to  review  inequality,  the  result  would  be  such  a 
crop  of  litigation  that  it  might  tie  up  taxes  for  an  indefinite 
period,  and  put  a  good  deal  of  expense  and  burden  on  the  city, 
and  the  Consolidation  Act  was  so  amended,  though  the  act  of 
1880  does  not  apply  in  full  to  the  county  of  New  York,  but  in  this 
county  tax  can  be  reviewed  only  when  it  is  illegal,  or  when  it 
represents  an  overvaluation  of  property,  and  it  is  not  possible; 
only  in  this  county  to  review  a  tax  on  the  ground  that  jour 
neighbor  has  been  taxed  lower  than  you,  or  that  you  have 


125 

axed  higher  than  your  neighbor;  you  are  confined  as  to  the 
•emedy  as  to  the  legality  of  the  tax  or  to  the  overvaluation  of 
four  property ;  that  has  been  decided  as  to  whether  it  is  coustitu 
ional,  and  the  courts  have  affirmed  it;  I  would  say  it  is  an  admin- 
strative  measure  which  saves  a  good  deal  of  litigation. 

Q.  When  was  this  decision  of  the  Court  of  Appeals  in  relation 
o  business  associations?  A.  Insurance  companies? 

Q.  Business  corporations  —  joint-stock  companies?  A.  There 
ivas  a  decision  of  the  Court  of  Appeals  last  June  in  connection 
vith  joint-stock  companies  which  practically  exempted  :ibont 
10,000,000  of  capital  in  this  city  alone  from  taxation;  that 
'epresented.  I  think,  simply  the  capital  of  the  express  companies, 
ind  did  not  include  any  of  the  other  joint-stock  companies. 

Q.  The  decision  ?  A.  The  decision  affected  a  particular  express 
company,  but  the  principle  of  that  decision  affected  every  joint- 
rtock  company  in  the  State  that  was  not  a  corporation. 

Q.  Previous  to  that  decision  those  corporations  had  been  pny- 
ng  taxes?  A.  Yes,  sir;  they  had  been  assessed  and  paying 
;axes  on  that  large  amount,  40,000,000;  they  had  been  treated  as 
corporations,  and  many  of  them  had  property  out  of  the  State, 
ind  many  had  their  capital  in  non-taxable  securities,  and  a  good 
leal  of  the  property  represented  real  estate,  and  the  assessment 
uld  not  be,  of  course,  anything  like  40,000,000,  but  that  was 
"heir  capitalization,  and  the  property  was  worth  that,  and  the 
lecision  of  the  Court  of  Appeals  necessarily  took  them  out  of 
:he  jurisdiction  of  the  tax  commissioners. 

Q.  What  was  the  language  of  the  decision?  A.  That  decision 
leld  that  a  joint-stock  company  formed  by  mutual  agreement 
nstead  of  by  act  of  the  Legislature  was  not  a  corporation  within 
;he  meaning  of  the  Revised  Statutes  authorizing  taxation  on  their 
capital;  in  other  words,  the  Revised  Statutes  say  that  the  capital 
stock  of  every  corporation  shall  be  taxed  so  and  so;  they  do  not 
nclude  joint-stock  companies;  consequently,  as  you  now  tax 
;he  company,  and  as  there  is  no  law  requiring  a  list  of  the  stock 
lolders  to  be  filed  anywhere  or  made  public  there  is  no  practical 
means  to  reach  the  assets  of  this  company  unless  they  happen  to 
in  the  form  of  real  estate. 


126 

Q.  That  is  a  case  requiring  future  legislation?  A.  I  think  so; 
I  think  those  express  companies  and  other  joint-stock  companies 
which  issue  certificates  of  stock  and  have  the  practical  powers  of 
a  corporation  should  be  put  on  the  same  plane  as  a  corporation. 

Q.  Otherwise  those  organized  under  the  general  law  may  dis- 
band and  form  a  new  company  with  articles  of  association,  -with- 
out  being   incorporated,   and   be   exempt   from   taxation?    A. 
Under  that  decision,  if  they  were  simply  formed  by  agreement 
and  not  incorporated,  you  could  not  tax  them  as  a  body. 

Q.  Would  they  lose  any  rights  that  they  now  possess  by  making 
the  change  as  owners  of  the  stock  or  anything?  A.  They  would 
be  liable  individually  for  the  debts  of  the  company  unless  the 
statutes  are  modified. 

Q.  Are  they  not  liable  now?  A.  The  shareholders  of  a 
corporation? 

Q.  Yes,  sir.    A.  No,  sir. 

Q.  Not  liable  for  the  amount  of  their  stock  or  holdings?  A. 
Not  if  they  have  paid  in;  the  assets  of  the  company  would  be 
liable  but  not  the  individual  stockholders;  whereas  in  those  joint 
stock  companies,  particularly  the  express  companies,  the  individual 
liability  of  the  stockholders  remains  in  full,  but  that,  of  course, 
was  easily  obviated  in  many  companies  by  having  dummies  own 
shares  of  stock. 

By  Mr.  Guenther. 

Q.  Have  you  seen  the  revision  of  the  corporation  laws  passed  last 
winter?  A.  Part  way  through  I  have. 

Q.  The  term  "joint  stock  corporations,"  does  not  that  include 
those  express  companies  now?  A.  I  have  not  read  that  within 
some  time. 

Q.  I  believe  it  is  under  the  head  of  the  transportation  com- 
panies? A.  I  read  that  thinking  possibly  it  might  have  changed 
the  laws,  but  I  don't  think  it  does;  they  are  taxed  by  the  State 
under  the  act  of  1880,  and  this  amendment  which  taxes  every  | 
franchise  and  business;  they  are  taxed  there  as  if  they  werej 
corporations. 


127 

Q.  You  don't  think  this  revision  includes  them  as  corporations 
for  the  purpose  of  taxation?  A.  I  don't  think  it  does;  that  is  my 
impression  in  reading  the  revision. 

By  Mr.  Creamer. 

Q.  As  regards  telegraph,  telephone,  subway  and  other  such 
companies,  what  has  been  the  experience  of  the  office  as  regards 
the  collection  of  taxes  and  assessments?  A.  I  believe  that  in 
respect  to  telegraph  companies  it  has  been  satisfactory;  a®  we 
understand  the  law  the  amount  of  assessment  would  have  to  be 
small,  and  seemed  to  be  measured  by  the  value  of  their  poles, 
lines,  and  so  forth;  capital  stock  equal  to  the  value  of  that  plant 
practically;  if  you  applied  the  law  strictly  you  would  have  to 
deduct  that  same  amount  because  it  was  to  be  assessed  as  real 
estate. 

Q.  What  law  was  that?  A.  There  were  several  laws;  I  can  not 
tell  the  exact  chapter  of  the  law:  I  know  it  came  that  there  was 
so  little  derived  from  them  under  the  usual  laws  that  most  of 
them  made  application  to  be  stricken  from  the  rolls,  and  one  or 
two  cases  taken  to  the  courts  where  we  tried  to  hold  them,  the 
court  decided  they  were  not  liable  beyond  the  extent  they  had 
claimed  —  beyond  $500;  that  was  the  assessment,  $500. 

Q.  Has  any  effort  been  made  to  amend  the  law  in  that  respect? 
A.  I  don't  know ;  I  might  say  here  that  I  have  had  very  little  to  do 
with  the  legislative  part  of  the  business,  or  even  to  the  extent  of 
suggesting  it. 

Q.  Mr.  Scott  attended  to  that,  and  Mr.  Blandy?  A.  Mr.  Scott 
while  he  was  there  and  Mr.  Blandy  subsequently;  I  don't  know 
whether  Mr.  Blandy  attempted  to  initiate  legislation,  but  I 
know  he  represented  the  department  there. 

Q.  As  to  telephone  and  subway  companies,  what  is  your  experi- 
ence? A.  I  think  the  telephone  companies  practically  come  under 
the  provision  for  telegraph  companies. 

Q.  Has  the  law  been  amended  so  as  to  exempt  theni|?  A.  I 
don't  know  how  the  law  originated,  but  as  I  remember  the  law 
related  to  the  taxation  of  their  poles  and  wires. 


128 

Q.  What  law  was  that?  A.  I  can  not  tell  you  now  when  that 
law  was  passed. 

Q.  Eighteen  hundred  and  fifty-three,  was  it  not?  A.  There 
was  a  law  of  1853  amended,  I  think,  in  1871;  I  have  had  very 
little  to  do  with  the  taxation  of  telephone  and  telegraph  companies; 
>t  has  not  come  under  my  observation. 

Q.  Who  in  your  office  did?  A.  I  mean  to  say  there  has  been  no 
litigation  since  I  have  been  there  that  would  bring  that  question 
up;  I  think  there  was  before  my  time,  but  not  since  1885,  with  the 
exception  of  this  one  case. 

Q.  That  js,  the  tax  commissioners  have  not  asked  for  inter- 
ference on  your  part  in  connection  with  the  non-collection  of 
assessments  on  their  property?  A.  I  do  not  remember;  there 
was  <a  company,  the  Postal  Telegraph  and  the  Mexican  Central, 
that  were  assessed,  and  in  those  cases  we  put  in  a  return  writ 
of  certiorari;  we  tried  to  hold  the  companies;  it  was  argued  at 
Special  Term  and  the  court  decided  that  the  law  was  as  claimed 
by  the  relator,  and  that  they  could  only  be  assessed  to  the 
extent  of  their  plant  within  this  city;  those  companies  were 
companies  which  did  largely  a  foreign  business  and  they  did  not 
have  much  capital  in  this  State;  the  value  of  their  business  was 
in  what,  we  call  the  f ranch Jse  —  the  earning  capacity. 

Q.  Do  you  think  any  change  in  the  laws  necessary  as  regards 
taxation  of  those  properties?  A.  Well,  I  have  my  own  views 
somewhat  on  that. 

Q.  That  is  what  the  committee  would  like  to  have  from  your 
experience?  A.  It  has  always  seemed  to  me  that  companies 
like  telegraph  and  telephone  companies  should  be  taxed. 

Q.  And  subways?    A.  Yes,  sir. 

Q.  Electric  companies?  A.  Yes,  sir;  they  should  be  taxed  in 
respect  to  their  revenues — their  gross  receipts;  I  do  not  believe 
that  any  system  based  on  net  receipts  would  be  practical,  because 
there  are  too  many  temptations  to  evade  it;  but  it  seems  to 
me  in  the  case  of  the  companies  I  have  named  there  should  be 
a  tax  based  upon  their  revenues. 

Q.  Now,  this  resolution  requires  an  inquiry  as  to  whether 
taxation  affecting  agricultural,  manufacturing,  commercial,  labor, 
bank  and  other  interests  of  the  State  has  affected  those  interests 


129 

so  largely  as  to  drive  capital  from  the  State;  has  any  such  state 
of  things  as  that  been  called  to  your  attention?  A.  Yes;  but 
generally  by  parties  outside  of  the  city  government  and  usually 
in  such  a  way  as  this:  A  party  who  represented  a  manufacturing 
company  would  complain  that  we  were  taxing  them  too  heavily, 
and  would  say,  if  you  keep  taxing  like  that  we  will  have  to  go 
outside  of  the  State;  we  can  not  pay  the  taxes  on  our  property; 
some  years  we  don't  make  any  money;  some  years  we  do,  but  the 
tax  runs  along  on  the  amount  of  our  property,  and  if  you  are 
going  to  allow  us  to  be  taxed  that  way  it  will  simply  result 
in  oar  moving  our  plant  out  of  the  State. 

Q.  Can  you  give  us  an  illustration  of  this  state  of  things?  A. 
I  would  not  like  to  mention  the  people  because  as  I  say  it  has 
usually  been  made  that  way, 

Q.  In  what  branch;  commercial  or  manufacturing?  A.  Well, 
both;  more  especially,  however,  manufacturing  where  they  have 
to  have  factories  and  where  they  have  to  have  more  or  less  of 
personal  property  as  part  of  their  plant;  if  they  go  outside  of  the 
State  and  simply  have  an  office  in  New  York  they  would  only 
be  liable  for  the  amount  of  their  capital  invested  in  this  State, 
aiid  they  would  get  rid  of  all  the  tax  on  that  portion  of  the 
plant  which  represents  personal  property;  that  would  be  true; 
I  don't  think  there  is  as  much  difference  as  many  imagine  between 
what  we  have  the  right  to  tax  against  foreign  corporations  doing 
business  here  and  against  a  domestic  corporation,  because 
if  a  corporation  —  a  manufacturing  company  —  simply  moves 
its  factory  out  of  the  State  and  then  practically 
keeps  its  capital  here,  in  bank  and  investments,  goods 
sold  011  credit,  in  this  State,  they  really  practically  have 
their  personal  estate  subject  to  our  tax  laws;  I  believe  thai  ha« 
been  found  so  in  practice. 

By  Mr.  Guenther. 

Q.  Do  you  reach  them  too?    A.  We  try  to;  there  are  some 
questions  now  before  the  court  which  in  the  course  of  a  year  or 
so  will  enlighten  us  on  that  question. 
17 


130 

Q.  Have  you  in  mind  any  amendment  to  the  law  that  would 
prevent  it?  A.  If  our  present  system  is  to  remain  in  respect 
of  taxing  corporations1  on  the  actual  value  of  their  capital 
I  think  some  provisions  should  be  made  to  determine  whether  01 
not  debts  are  deductable  from  the  value  of  their  capital  stock 
as  such;  that  is  one  point;  I  might  illustrate  it  in  this  way; 
corporation,  we  will  say,  has  a  capital  of  $1,000,000,  and  it  is 
all  invested  in  property  which  -would  be  liable  to  taxation,  either 
real  estate  or  plant  or  merchandise  which  they  manufacture; 
now,  it  comes  around  in  the  beginning  of  the  year  and  they 
anticipate  a  large  tax  based  upon  that  capital,  so  they  borrow 
enough  money  to  represent  the  personal  estate  —  they  do  not 
attempt  to  escape  from  the  other  —  they  will  borrow  say  500,000, 
assuming  that  to  be  the  amount,  of  their  personal  property  and 
they  \vill  come  here  and  then  they  claim,  a,  deduction  for  the 
amount  of  the  indebtedness  of  500,000,  which  would  leave  nothing 
but  the  real  estate  to  tax;  now,  there  is  a  very  serious  question 
before  the  courts  whether  the  actual  value  of  that  company  is 
at  all  impaired  by  that  debt  of  500,000,  when  they  have  a  govern- 
ment bond  against  every  $1,000  of  indebtedness;  at  the  same 
tune,  that  ought  to  be  made  plain  somewheres. 

By  Mr.  Creamer. 

Q.  Does  not  this  legislation  of  last  winter  cover  that  regarding 
an  indebtedness  in  government;  bonds?  A.  I  think  it  would 
in  a  case  of  that  sort;  I  think  that  last  year's  legislation  might 
cover  that  point;  of  course,  that  would  simply  leave  open 
the  question  of  indebtedness. 

Q.  That  has  been  a  great  relief,  has  it?  A.  I  should  think 
that  was  a  very  excellent  law. 

Q.  Did  that  emanate  from  your  department  here?  A.  I  don't 
know. 

Q.  You  were  in  the  office  at  the  time?  A.  1  was  in  the  law 
department;  it  did  not  emanate  from  me  personally. 

Q.  During  your  term  of  connection  with  the  office,  did  any 
of  the  State  authorities  ever  advise  with  you  in  connection  with 
amending  the  laws  concerning  taxation?  A.  No;  I  think  notj 


131 

we  used  to  have  some  conversation  with  the  State  Board  of  Equal- 
ization, but  I  do  not  think  on  any  other  law  unless  possibly  the 
savings  banks;  that  was  only  a  conversation. 

Mr.  Creamer. —  I  want  to  show,  Mr.  Chairman,  that  there  has 
been  a  lack  of  understanding1  between  the  local  authorities  and 
1lie  State  authorities  for  all  these  years  past  in  connection  with 
this  all  important  subject,  and  that,  perhaps,  to  that  we  may 
attribute  many  of  the  abuses  that  have  grown  out  of  the  personal 
lax  system.  That  is  especially  what  I  want  to  show. 

Q.  Now,  can  you  please  staite  to  the  committee  why  it  is,  at 
least  if  you  have  looked  into  the  subject,  that  such  corporations 
as  hotel  companies  and  steamboat  companies  doing  business  in 
(his  State,  why  it  is  they  organize  under  the  laws  of  other  States, 
New  Jersey  particularly;  I  believe  the  People's  Line  of  Steamers, 
many  years  ago,  before  these  special  tax  laws  were  passed  con- 
cerning corporations,  the  Iron  Steamboat  Company  and  hotel 
companies  here;  what  advantages  have  they  under  the  New 
Jersey  laws  or  the  laws  of  that  State  that  they  are  deprived 
of  here,  doing  business  alone  with  this  State,  and  within  this 
State?  A.  I  doubt  very  much  whether  they  have  any  particular 
advantages  with  respect,  to  taxation;  I  think  they  have  advan- 
tages with  respect  to  the  inspection  of  their  books  and  the  reports 
which  they  may  ha.ve  to  make  to  the  State  department;  I  think 
that  the  tax  on  the  organization  of  companies  has  tended  to 
send  some  corporations  out  of  the  State,  and  there  may  be  other 
reasons,  but  take  the  cases  you  mention,  in  respect  to  taxation, 
I  doubt  whether  a  hotel  company,  for  example,  organized  under 
the  laws  of  New  Jersey  and  operating  here  would  save  much 
in  the  way  of  taxation. 

Q.  Have  you  any  knowledge  concerning  a  house  that  was 
mentioned  here  yesterday,  not  selecting  individuals,  because  it 
is  already  published;  Mr.  Colenian  mentioned  the  case  of  H.  B. 
Claflin  that  organized  under  the  laws  of  New  Jersey  and  doing 
business  in  this  city;  what  exemptions  do  they  obtain,  or  profit, 
if  any?  A.  I  really  do  not  know. 


132 

Q.  They  are  held  in  this  city  as  a  corporation?  A.  They 
would  be  taxed  on  the  actual  value  of  their  capital  stock. 

Q.  Are  they  assessed  here,  Mr.  Feitner? 

Mr.  Feitner. —  One  million  five  hundred  thousand  dollars. 

Q.  And  they  are  organised  under  the  laws  of  New  Jersey 
A.  Yes,  sir;  their  capital  is  9,000,000. 

Q.  Will  you  please  state  to  us  how  much  they  had  been 
assessed  previously  as  a  firm?  A.  I  do  not  think  over  f 200,000. 

Q.  Then  the  city  gains  even  if  they  have  organized  under  the 
laws  of  the  State  of  New  Jersey?  A.  Yes,  sir. 

Mr.  Creamer. —  That  is  one  notable  incident  in  connection 
with  this  matter  of  driving  capital  away  from  this  State.  The 
reason  this  firm  is  especially  mentioned  is  because  it  is  if  not  the 
most  conspicuous,  one  of  the  most  conspisuous  dry  goods  firms  in 
the  city,  and  the  head  of  it  is  one  of  the  most  public  spirited  citi- 
zens; it  was  thought  there  must  be  something  seriously  wrong 
that  we  have  driven  them  to  organize  in  another  State,  but  it 
seems  that  the  record  shows  that  the  city  or  State  does  not  lose 
any  of  the  taxes. 

Q.  Now,  Mi*.  Coleinan,  is  ihere  anything  you  can  state  in  rela- 
tion to  that  question  of  personal  taxation  that  would  assist  the 
local  authorities  here  in  the  discharge  of  their  duties  to  hold 
this  1,700,000,000  of  personal  property  which  is  assessed  every 
year  and  which  now  escapes  taxation  with  the  exception  of 
300,000,000  of  that  assessment?  A.  I  suppose  a  large  part  of  that 
amount  which  you  first  mentioned,  1,700,000,000,  are  those  origi- 
nal assessments  against  corporations,  and  that  assessment  is 
perhaps  put  down  at  par  value  of  the  capital  of  a  company;  the 
company  then  comes  before  the  commissioners  and  shows  that  it. 
is  entitled  to  certain  deductions  by  reason  of  ownership  of  govern 
rnent  bonds,  ownership  of  stocks  of  corporations  which  are  not 
taxable,  real  estate,  property  out  of  the  State  and  indebtedness, 
and  of  course  I  know  from  personal  experience  in  examining  j 
those  returns  that  those  deductions  were  allowed  by  the  commis-i 
sioners  and  allowed  under  the  direction  of  the  statute,  as  inter- 


133 

preted  by  the  court;  of  course,  the  only  way  we  could  increase 
the  taxable  property  would  be  to  remove  some  of  these  litigations ; 
do  away  with  the  right  to  allow  indebtedness;  we  might  make 
property  that  is  out  of  the  State  owned  by  a  corporation  taxable 
here  but  that  offends  some  notions  of  justice;  the  law  which  you 
referred  to  a  moment  ago  about  buying  exempted  securities  like 
government  bonds;  if  that  is  enforced,  as  we  think  the  spirit  of 
it  intends,  it  will  prevent  a  good  deal  of  evasion  hereafter. 

By  Mr.  Guenther. 

Q.  Do  you  think  the  enforcement  of  that  would  be  the  cause 
of  driving  any  capital  out  of  the  State  —  the  enforcement  of  the 
collection  of  the  personal  taxes?    A.  I  could  not  say;  of  course, 
every  increase  in  the  burden  of  taxation  makes  the  corporations 
restless  the  same  as  individuals;  you  can  not  tell  in  advance 
what  the  result  would  be  in  that  regard;  the  stricter  you  make 
the  law  the  harder  it  is  for  honest  corporations,  I  might  say,  the 
harder  it  will  be  for  dishonest  ones  to  evade  it,  but  a  good  deal 
of  the  diminution  of  the  assessed  value  of  the  property  as  it  is 
first  returned  in  January,  and  as  it  is  ultimately  returned  in 
In  I  June  or  May  arises  from  the  difference  between  the  actual  and 
ill  par  value  of  corporate  capital;  I  suppose  the  commissioners  are 
putting  down  capital  valuation  at  what  the  stock  would  war- 
Hrant;  for  example,  a  trust  company  has  $500,000,  if  that  were 
put  down  at  that  rate  in  the  tax  with  the  condition  here  in 
ij>i-|New  York,  it  would  seem  like  a  large  loss,  but  it  is  put  down 
s I  as  the  statutes  are  constructed  by  the  Court  of  Appeals;  there 
the  I  is  a   case  where  something   should  be  done,   either  make  the 
trust   companies   taxable   like   banks,    on   the   sjhareholders,    or 
em  I  else  change  the  system  of  taxation  and  tax  them  as  to  their 
not  I  revenues,  because  the  largest  part  of  their  assets  belong  to  the 
0s,  I  depositors,  but  the  trust  companies,  so  far  as  complaints  have 
been  made  show  that  they  have  the  advantage  of  banks  in  that 
mils- they  practically  escape  taxation  by  holding  so  large  a  portion 
of  their  depositors'  money  in  a  form  which  can  not  be  reached 
paying  on  $1,000,000  capital  while  they  30,000,000  assets  and 


134 


surplus;  all  they  would  have  to  do  would  be  to  buy  4,000,000  of 
bonds;  you  can  not  reach  it. 

Q.  Can  not  a  law  be  passed  that  would  affect  that?  A.  I 
think  it  could;  I  have  no  doubt  a  law  could  be  passed  which 
would  meet  that  difficulty;  of  course,  if  you  should  tax  a  share- 
holder in  a  trust  company,  then  they  would  be  on  a  par  with 
banks. 

Q.  I  suppose  much  of  the  difficulty  arises  from  the  fact  of 
upholding  those  people  in  the  intercommunication  with  States; 
has  anything  of  that  sort  ever  been  called  to  your  attention  — 
non-residents  residing  in  New  Jersey,  Connecticut,  Rhode 
Island,  which  have  recently  attracted  some  attention?  A.  Yes, 
sir;  the  non-resident  holder  of  bank  stock  has  to  pay  a  tax  here, 
but  a  non-resident  of  other  personal  property  is  not  liable  here 
except  for  money  invested  in  business  or  in  the  hands  of  an  agent 
here;  now,  a  person  living  here  six  months  of  the  year  might  be 
traveling  the  rest  of  the  year;  perhaps  have  a  domicile  in  some 
other  State;  perhaps  in  Westchester  county,  New  Jersey  or  Khode 
Island;  he  claims  exemption  here  on  his  personal  property;  that 
case  is  now  before  the  courts,  the  question  whether  because  a  man 
has  his  domicile  outside  of  the  State  as  distinguished  from  his 
residence  he  is  liable  to  taxation  here  upon  his  personal  property; 
we  can  not  say  what  the  result  will  be  until  we  hear  what  th* 
court  says,  but  it  seems  to  me  that  the  same  objection  in  a  lessor 
degree  applies  to  the  law  where  the  party  has  two  residences  in 
this  State;  we  had  a  great  deal  of  trouble  in  trying  to  fix  a.  proper 
residence  for  taxation,  and  as  the  committee  knows  the  suburbs  of 
every  State,  sometimes  called  the  taxpayers'  paradise,  has  a 
large  number  of  wealthy  people  who  claim  residence  in  the  suburbs 
rather  than  the  city. 

Q.  Taxpayers'  paradise?    A.  I  think  it  is  usually  called  that. 

Q.  And  those  people  who  pay  this  personal  tax  are  called  the 
honest  ignorant?  A.  That  I  do  not  know. 

Q.  That  is  the  phrase  that  Commissioner  Coleman  used  yester- 
day? A.  I  don't  know  about  that. 


135 

By  the  Chairman. 

Q.  Have  you  ever  made  any  comparison  between  the  rates  of 
taxation  in  those  suburbs  and  the  city  with  a  view  to  ascertain 
ing  where  the  advantage  was?  A.  Not  so  much  about  the  rates, 
but  I  have  with  reference  to  the  amounts  of  the  assessments;  sev- 
eral cases  have  come  under  my  observation  where  parties  have 
told  me  how  much  they  were  assessed  in  the  country;  I  never 
knew  it  to  come  nearer  than  fifty  per  cent  of  the  amount  assessed 
in  the  city. 

Q.  You  think  the  proportion  of  valuation  is  higher  in  the  city? 
A.  Yes,  sir;  I  think  so  on  people  who  are  wealthy. 

Q.  What  you  say  relates  to  personal  property?  A.  Yes,  sir; 
real  estate  is  another  branch. 

By  Mr.  Creamer. 

Q.  Many  of  those  birds  of  paradise  live  abroad  and  have  per- 
sonal property  invested  in  this  county;  have  you  ever  had  any 
cases  with  them?  A.  You  mean  by  "abroad,"  outside  of  the 
State,  or  other  countries? 

Q.  In  other  countries;  it  is  estimated  that  in  every  European 
city  there  is  an  American  colony  with  their  property  vested  in 
this  city,  principally  in  first  mortgages  on  our  real  estate;  have 
you  had  any  experience  with  the  taxation  of  mortgages  in  cases 
arising  from  that?  A.  Yes,  sir;  I  have  had  this  experience,  which 
I  think  it  is  anomalous,  and  I  think  it  ought  to  be  corrected;  a  per- 
son residing  in  this  State,  and  having  invested  his  money  in  mort- 
gages in  any  part  of  the  world,  is  taxable  upon  the  value  of 
those  mortgages;  now,  if  that  person  happens  to  be  a  trustee 
and  he  happens  to  have  a  co trustee  who  lives  in  New  Jersey, 
all  ho  need  do  is  to  send  those  papers  to  New  Jersey,  and  put 
them  in  a  safety  deposit  vault,  and  under  the  law  of  the  State 
as  declared  by  the  Court  of  Appeals  it  is  not  taxable,  even 
one-half  of  the  estate  being  his  proportion;  I  think  that  it  is 
outrageous;  either  the  law  should  be  changed  as  to  the  resi- 
dent, or  modified  as  to  the  non-resident;  the  same  person  might 


133 


be  taxable  in  his  individual  capacity,  when  if  he  simply 
represented  his  dead  brother,  property  in  the  same  situation 
exactly  would  escape  taxation;  I  can  not  see  any  reason  for  that; 
I  am  not  saying  now  whether  even  the  individual  should  be  taxed 
when  he  has  invested  his  money  out  of  the  State,  but  in  my 
opinion  there  should  be  no  distinction  between  a  trustee  and  an 
individual  owner  which  arises  out  of  the  construction  given  by 
the  courts  to  the  law  of  1883,  which  makes  the  provision  for  taxes 
on  bonds  and  mortgages  owned  by  residents  in  this  State,  but 
representing  investment  outside  of  this  State;  they  unfortunately 
use  the  words  "  owners  or  owner,"  and  did  not  qualify  it  by 
saying  both  beneficial  and  representative,  or  something  to  that 
effect,  and  the  courts  have  derided  it  did  not  include  trustees. 

Q.  In  connection  with  this  matter  of  taxing  mortgages,  have 
you  heard  of  any  cases  where  people  refrained  from  investing  in 
bonds  and  mortgages  in  this  county  on  account  of  taxation;  do 
you  know  of  any  such  case?  A.  I  do  not  myself. 

Q.  What  you  have  heard  was  mere  hearsay?    A.  Yes,  sir. 

Q.  You  know  of  no  case?    A.  I  do  not  myself. 

Q.  Where  capital  has  fled  from  this  city  or  State  on  account 
of  taxation  and  mortgages?  A.  I  do  not. 

By  Mr.  Gruenther: 

Q.  You  stated  a  few  moments'  ago  in  relation  to  trust  companies 
that  they  do  about  the  same  business  as  banks  do;  can  you  make 
that  more  plain?  A.  What  I  mean  is  this:  A  trust  company  is  the 
depository  of  funds,  in  fact,  I  think,  in  many  cases  has  more  than 
any  bank  in  deposit;  it  has  the  privilege  of  loaning  those  moneys, 
and  making  large  interest  on  the  money  loaned;  it  has  a  right 
to  act  as  trustee,  guardian,  executor  and  committee,  and  that  is 
another  field  of  operation  which  is  not  usually  enjoyed  by  money 
institutions;  now,  the  owner  of  bank  stock  is  liable  personally 
for  the  actual  value  of  his  share  of  stock,  and  the  bank  is  exempt 
from  temptation  on  its  property,  except  real  estate,  owing  to  an 
act  of  Congrms  that  is,  a  national  bank,  and  our  State  law  has 
made  the  sam<*  provision  practically  as  to  other  banks;  now,  the 


137 

shareholder  of  the  bank  can  not  escape  taxation  unless  his  debts 
allow  him  to  wipe  it  out,  consequently  it  puts  a  premium  on  the 
ownership  of  trust  company  shares — to  make  people  inclined  to 
invest  in  them  as  against  banks,  because  there  is  no  taxation  on 
the  shareholders  of  the  trust  companies. 

Q.  You  don't  think  they  ought  to  enjoy  that  privilege?  A. 
It  does  not  seem  to  me  right  and  proper;  a  trust  company  I  would 
not  look  upon  as  savings  banks,  and  in  respect  to  savings  banks, 
I  think  it  has  always  been  supposed  that  the  deposits  in 
savings  banks  were  exempt  from  taxation;  the  attorneys-general 
of  the  State  have  given  various  opinions  on  that  subject,  but  the 
Court  of  Appeals  within  two  or  three  months,  speaking  through 
the  chief  judge,  has  said  that  savings  banks  deposits  are  not 
exempt  from  taxation;  I  believe  some  of  the  judges  would  not 
express  an  opinion  on  that  point  but  if  there  is  any  doubt  about 
it,  it  would  seem  to  me  that  some  provision  should  be  made  to 
exempt  a  moderate  amount  of  savings  in  banks. 

Q.  Do  you  know  of  any  attempt  ever  made  to  tax  those  trust 
companies  as  trustees  or  executors?  A.  Yes,  sir;  there  are  thirty 
such  cases  on  the  books  this  year,  I  think,  where  we  have  taxed 
one  company  as  executor  or  guardian  or  trustee. 

Q.  Do  they  pay  their  tax?  A.  I  presume  they  always  do;  they 
never  object  to  paying  taxes  as  trustee,  because  that,  of  course, 
does  not  come  out  of  their  shareholders. 

By  Mr.   Gifford. 

Q.  How  about  non-residents  claiming  exemption  on  account  of 
indebtedness?  A.  Our  only  tax  against  them  is  under  the  act 
of  1855,  where  we  tax  parties  for  sums  of  money  invested  in  busi- 
ness, and  that  question  is  before  the  court,  whether  a  party 
engaged  in  business  here,  perhaps  a  corporation,  claims  to  offset 
their  indebtedness  against  property  in  this  State,  and  they  claim 
to  offset  their  entire  indebtedness,  whereas  they  may  have  at  their 
home  office  more  than  enough  property  to  meet  their  engagement; 
tihat  is  a  question  that  is  before  the  courts  now,  because  the  law 
says  that  they  shall  be  assessed  and  taxed  as  other  persons  resid- 
18 


138 

ing  in  the  State;  taxed  as  if  they  were  residents,  in  other  words; 
and  the  question  then  is  how  would  a  resident  then  be  taxed;  we 
have  had  a  recent  decision  of  the  Court  of  Appeals  again,  which 
has  given  rise  to  speculation  as  to  which  would  be  the  proper 
to  assess  a  non-resident  having  money  invested  in  business  in  tl 
State. 

By  Mi*.  Creamer. 

Q.  Take  the  case  of  the  National  Cordage  Company,  a  non- 
resident corporation;  has  that  company  been  called  to  your 
attention?  A.  I  think  not. 

Q.  Let  us  understand  how  these  people  evade  all  taxation;  at 
least  two-thirds  of  the  capital  stock  of  this  non-resident  corpora- 
tion is  owned  by  citizens  or  residents  of  this  State;  their  corpora- 
tion is  exempt  because  their  business  is  not  in  this  State,  as  I 
understand  it. 

Mr.  Feitner.—  They  are  assessed  at  f  50,000. 

Mr.  Creamer. —  Their  capital  is  what? 

Mr.  Feitner. —  Ten  or  twenty  millions  of  dollars;  I  don't  remem- 
ber; something  like  15,000,000. 

Mr.  Creamer. — 'It  has  recently  been  increased,  I  think,  to 
30,000,000. 

Mr.  Feitner. —  It  may  be. 

Mr.  Creamer. —  How  do  they  claim,  exemption  —  that  they  not 
only  escape  as  a  corporation  but  also  as  individuals  as  well,  still 
dwelling  among  us;  now,  that  f 50,000,  is  that  personal? 

Mr.  Feitner. —  Personal. 

Mr.  Creamer. —  Does  that  exempt  the  individual  owners  of  this 
stock? 

Mr.  Feitner. —  That  is  a  question  not  well  determined;  that  is 
a  question  to  come  under  the  provision  of  that  section  that  Mr. 
Coleman  refers  to  in  the  act  of  1885. 

Mr.  Creamer. —  Does  the  payment  of  an  assessment  on  this 
|50,000  exempt  the  owners  of  a  corporation  who  owns  shares 
amounting  to  fifteen  or  twenty  million,  and  how  and  why,  and 
what  is  the  remedy? 


139 

The  witness. —  If  it  is  a  corporation  the  assessment  of  the 
capital  stock  under  the  Revised  Statutes  of  1857  does  exempt 
tine  holder  of  shares,  because  the  Revised  Statutes  say  and 
expressly  provide  that  every  person  who  owns  a  share  of  stock 
in  a  corporation  which  pays  taxes  on  its  capital  is  exempt  from 
taxation  on  the  theory  that  it  would  be  double  taxation;  is  this 
;i  trust  or  a,  corporation? 

Q.  It  is  a  trust.  A.  If  it  is  a  trust,  there  would  be  then  a 
question  as  to  whether  or  not  they  would  be  exempt;  there  may 
be  a  question  as  to  whether  or  not  we  can  tax  them  on  their 
capital;  I  was  assuming  in  my  answer  that  it  was  a  corporation, 
but  if  it  is  a  trust,  there  is  a  question  whether  you  could  tax  a 
shareholder  of  a  trust  which  is  not  a  corporation,  because  under 
the  law  as  to  the  separate  corporations  which  go  to  make  up  this 
trust,  each  corporation  would  be  liable  to  taxation  as  long  as  it 
continued  in  existence;  I  was  assuming  it  was  a  corporation. 

Q.  Is  a  trust  untaxable  ?  A.  I  do  not  think  our  tax  laws  recog- 
nize trusts  as  such  for  the  purpose  of  taxation;  they  recognize 
simply  individuals  and  corporations. 

Q.  Trusts  were  not  anticipated  under  the  law?  A.  I  hardly 
think  so. 

Q.  Still,  they  are  a  larger  factor  in  the  business  affairs  of  the 
city  and  State;  take,  for  instance,  the  Reading  Trust,  with  a  com- 
bined capital  of  500,000,000,  I  believe ;  a  t  rust  that  affects  the  inter- 
ests of  every  man,  woman  and  child  in  this  State;  there  is  no 
way  for  the  laws  to  reach  that  trust,  as  they  reach  the  tax  on 
tin*  people  here?  A.  I  don't  know  how  that  trust  is  made  up, 
but  t  assume  a  trust  made  from  corporations  of  this  State; 
suppose  ten  corporations  of  this  State,  each  preserving  its  cor- 
porate existence,  may  form  a  trust;  now,  I  think  each  individual 
corporation  would  still  be  liable  on  the  value  of  its  capital,  and 
if  that  were  so  then  the  shareholders  of  the  corporation  would 
not  be  separably  assessed  for  their  interest;  they  may  be  share- 
holders originally,  and  they  are  now  certificate  holders,  the  cer- 
tificates taking  the  place  of  the  shares  of  stock,  but  each  corpo- 
ration preserving  its  identity  and  liable  to  taxation;  in  that  case, 


140 


I  do  not  think  that  the  holder  of  the  trust  certificate  would  be 
liable. 

Q.  You  could  not  give  the  committee  anything  from  the  records 
as  regards  the  exemption  of  those  individual  owners  of  the  stock 
of  a  corporation  who  exempt  themselves  through  some  proceed- 
ing, by  paying  a  small  amount  on  their  capital  stock?  A.  I 
don't  know  that  I  quite  understand  the  question. 

Q.  What  difficulty  is  there  in  the  law  that  permits  the  indi- 
vidual owners  of  a  corporation  —  the  individual  owners  of  shares 
amounting  to  say  f  15,000,000  to  become  exempt  by  the  corpora- 
tion itself  paying  on  an  assessment  of  $50,000?  A.  Well,  we 
will  assume  that  that  $50,000  assessment  is  all  that  is  permitted 
under  the  law  as  it  stands,  because  they  have  put  their  property 
out  of  the  State. 

Q.  You  are  not  familiar  then  with  a  law  that  would  cover  this 
case?  A.  I  don't  know  any  law  that  would  cover  a  trust;  I  am 
familiar  with  the  law  in  respect  to  corporations  or  individuals. 

Q.  Then,  the  law  is  defective  because  they  are  outside  of  the 
law?  A.  I  think  they  would  be  outside  of  the  law  as  a  trust. 

By  the  Chairman. 

Q.  The  purposes  of  this  inquiry  seem  to  be  divided  into  three 
heads;  the  first  is  as  to  the  propriety  of  modifying  the  present 
law  relating  to  taxation,  discount  and  interest  so  far  as  they 
affect  the  agricultural,  manufacturing,  commercial,  laboring, 
banking  and  other  interests  of  the  State;  can  you  briefly  suggest 
any  such  modification  of  the  existing  law,  beyond  what  you  have 
already  stated?  A.  There  is  one  matter  relating  to  taxation 
generally,  which  affects  the  entire  State,  and  that  is  the  present 
arrangement  of  distributing  State  taxes  in  the  various  counties. 

Q.  What  modification  would  you  suggest  in  that  regard?  A. 
It;  would  be  quite  radical,  and  that  would  be  to  do  away  entirely 
with  the  State  taxes  on  land,  which  would  remove  all  friction 
between  the  counties;  that  would  amount,  of  course,  to  a  large? 
loss  of  revenue,  which  would  have  to  be  made  up,  and  so  far 
as  1  have  been  able  to  give  it  attention,  it  seemed  to  me  the 


141 

way  to  do  that  would  be  from  a  corporation,  through  taxing,  not 
their  property,  but  their  revenues,  and  make  the  tax  on  corpora- 
tions a  State  affair  entirely;  not  local,  except  on  real  estate,  with 
this  exception,  that  where  a  corporation  held  what  you  might 
call  an  exclusive  local  franchise,  such  as  a  gas  company,  a  surface 
railroad,  or  a  corporation  of  that  character,  in  some  way  a  com- 
pensation should  go  to  the  city  which  gives  it  that,  but  in  general 
corjK>rations  the  State  should  derive  the  revenue  alone;  now,  the 
trouble  about  the  equalization;  it  is  impossible,  it  seems  to  me, 
for  any  three  men  —  I  know  nothing  about  the  personnel  —  it 
is  impossible  for  them,  in  their  limited  time,  and  having  their 
other  occupations  to  make  anything  more  than  a  guess  at  the 
comparative  valuations  in  the  various  counties;  it  would  take  a 
man  a  life-time,  I  would  say,  to  do  that  thoroughly,  and  give  his 
whole  time  of  it,  and  if  the  State  law  was  changed,  as  it  has 
been  in  Pennsylvania,  it  would  do  away  entirely  with  that  ele- 
ment of  friction;  I  am  not  prepared  now  to  give  statistics  as  to 
how  much  can  be  raised  from  corporations,  from  licenses,  inheri- 
tance tax,  etc.,  but  I  know  it  has  been  done. 

Q.  What  do  you  say  as  to  the  continuation  or  extension  of  the 
present  method  of  collecting  a  collateral  inheritance  tax  and 
direct  inheritance  tax?  A.  I  believe  in  it  myself. 

Q.  Do  you  believe  in  continuing  it  about  as  it  is,  or  in  extending 
it?  A.  I  am  not  familiar  enough  with  the  particulars  of  that 
legislation  in  its  present  form  to  say,  but  I  think  that  the  present 
exemption,  $  10,000  for  direct,  is  proper  enough,  and  I  believe  $500 
for  the  collateral  seems  to  be  fair. 

Q.  Now,  the  second  branch  of  the  inquiry  seems  to  be  whether 
capital  has  been  or  is  being  driven  from  this  State  by  restrictions 
affecting  corporations,  and  if  so,  as  to  the  remedy  therefor;  now, 
in  your  opinion,  has  capital  been  driven  from  the  State  by  reason 
of  taxation  on  corporations,  and  if  so,  what  remedy  would  you 
suggest?  A.  I  might  say  tbat  most  of  the  objections  that  I  have 
heard  about  incorporating  under  the  New  York  law  at  present 
were  from  lawyers  who  said  they  would  not  attempt  to  guess 
what  those  laws  might  be  some  day  held  to  mean;  so  far  as  the 


taxation  is  concerned  I  am  not  prepared  to  say  they  would  be 
benefited  in  the  least  as  to  the  organization  tax,  but  as  to  the 
tax  on  their  stock  I  think  that  a  domestic  corporation  would  no1 
be  assessed  any  higher  on  the  same  property  by  the  State  than 
iion-resident  corporation,  as  I  understand  the  law. 

Q.  You  believe  and  you  recommend  a  modification  of  the  exist- 
ing laws  to  such  an  extent  as  to  divorce  the  question  of  raising 
money  for  State  purposes  trom  local  purposes?  A.  Yes,  sir; 
it  might  be  necessary  as  a  detail  to  still  make  the  county  act  as 
collecting  agent  for  the  Stale;  I  think  it  would  be  better  if  they 
could,  without  increasing  the  force  of  officials,  to  have  it  entirely 
separated,  but  I  certainly  believe  in  removing  this  State  tax  on 
land  as  it  stands  now,  between  the  counties,  so  that  no  question 
of  equalization  would  have  to  be  considered  at  all;  I  would  like 
to  express  my  views  on  this  question  that  has  been  agitated  for 
some  years  by  the  State  board  asking  not  to  restrict  their 
powers  but  to  enlarge  them;  it  seems  to  me  that  that  would  be 
worse  than  to  attempt  to  tax  lands  —  guess  at  the  value  of  the 
land  —  but  not  personal  property;  I  think  I  heard  in  thi»  very 
room  where  one  person  made  a  guess  where  the  personal  property 
that  escaped  alone  amounted  to  1,600,000,000;  that  is  pre- 
posterous; a  great  portion  of  that  is  in  a  form  not  taxable  at  all, 
certificates  of  stock  and  those  things  which  go  to  make  up  wealth 
to  a  very  large  degree;  I  don't  think  that  they  escape  as  much 
as  we  think  they  do. 

Q.  The  committee  has  had  one  witness  on  the  stand  who 
expressed  strong  views  in  opposition  to  the  taxation  of  personal 
property;  what  have  you  to  say  on  that  point?  A.  I  think  this, 
that  it  is  impossible  to  even  approximate  the  value  of  personal 
property  under  our  present  laws,  even  if  you  should  increase  the 
force  of  officers  tenfold. 

Q.  What  do  you  say  as  to  the  wisdom  of  taxing  it  at  all?  A. 
lit  is  a  very  large  question,  Mr.  Chairman;  my  mind  at  present  is 
shaping  itself  towards  a  conclusion  which  is  adverse  to  taxing 
personal  property  except  in  the  form  of  direct  taxation  by  the 
State  upon  corporations,  which  is  a  tax  really  on  gross  receipts; 


143 

as  to  personal  property  held  by  individuals  at  present,  as  far  as 
my  mind  is  made  up,  it  is  against  it;  .1  do  not  see  how  it  can  be 
removed  at  once,  but  gradually  without  interfering  largely  with 
the  revenues,  if  I  may  not  be  considered  too  heretical,  I  would 
say  that  the  fairest  tax  upon  an  individual  is  a  tax  according 
to  his  income  which  does  not  put  a  tax  upon  a  person  according 
to  what  he  has  and  has  paid  for  and  produces  no  revenue,  like 
works  of  art,  furniture  and  things  of  that  kind,  but  apportion  his 
tax  according  to  his  ability  to  bear  it;  when  he  makes  little  he 
pays  little;  when  he  makes  much  he  pays  much,  and  ought  to. 

Q.  Do  you  want  to  be  understood  that  you  arc  in  favor  of 
what  is  known  as  an  income  tax?  A.  Yes,  sir;  I  am  at  present 
in  favor  of  what  is  known  as  income  tax;  of  course,  their  are 
a  great  many  kinds. 

Q.  If  the  policy  of  taxing  personal  property  is  to  continue, 
what  do  you  say  as  to  the  present  method  of  allowing  an  offset 
by  indebtedness?  A.  I  do  not  believe  in  it;  I  think  there  should 
be  no  such  thing;  as  it  is  taxed  now,  AVC  tax  credits;  a  person 
owns  a  mortgage,  and  the  person  to  whom  he  has  loaned  that 
money  lives  in  the  State,  there  has  been  no  increase  of  property; 
one  man  loaning  to  the  other,  and  it  would  not  be  right  to  tax 
a  credit,  and  tax  the  money  in  the  hands  of  a  debtor;  that  would 
be  a  double  taxation;  so  that  if  you  tax  credits,  theoretically  you 
should  exempt  debts,  but  I  do  not  believe  in  taxing  either. 

Q.  Now,  I  didn't  quite  catch  what  you  said  on  the  subject 
of  the  taxation  of  bonds  and  mortgages;  are  you  in  favor  of  tax- 
ing mortgages  or  not?  A.  As  a  separate  piece  of  property,  or 
as  a  credit? 

Q.  Taxing  a  mortgage,  the  holder  of  the  mortgage?  A.  It 
really  doesn't  make  much  difference  which  way  you  are  going 
to  do  it;  if  you  are  going  to  tax  the  mortgages  and  not  the  mort- 
gagor, he  would  pay  more  interest;  the  only  way,  if  you  tax 
income;  of  course,  the  man  holding  the  mortgage  would  be  in 
receipt  of  a  certain  income  from  it. 

Q.  Under  the  present  system,  the  holder  of  the  fee  is  assessed 
on  the  basis  of  the  value  of  real  estate,  without  regard  to  the 


incumbrances?  A.  Yes,  sir;  of  course,  that  is  logical  in  one 
sense,  because  it  does  not  diminish  the  value;  but  it  is  not 
to  the  owner  of  the  real  estate  who  does  not  happen  to 
enough  personal  estate  to  offset  it,  if  you  are  going  to  continue 
that  system  of  deduction  by  debts. 

Q.  Assuming  that  the  policy  of  the  State  should  be  to  continue 
to  assess  the  holder  of  the  fee  for  the  full  value,  would  you  then, 
in  addition  to  that,  recommend  the  taxation  of  the  mortgagee  — 
the  owner  and  holder  of  the  mortgage?  A.  I  do  not  think  T 
would;  if  you  are  going  to  keep  up  deductions  for  debts  on  per- 
sonalty, you  should  allow  it  on  realty;  of  course,  it  has  got  to  be 
very  carefully  guarded  to  show  the  good  faith  of  the  transaction; 
it  would  open  the  door  to  a  good  deal  of  evasion. 

Thomas  G.  Sherman,  called  as  a  witness,  being  duly  sworn, 
testified  as  follows: 
By  Mr.  Creamer. 

Q.  Have  you  read  this  resolution?    A.  I  have. 

Q.  Will  you  please  give  the  committee  your  views  concerning 
the  same?  A.  I  refer  to  two  or  three  papers,  but  not  to  read 
literally  from  them;  I  understand  the  question  to  be  mainly  the 
question  of  the  taxation  of  personal  property. 

Q.  And  equalization?     A.  Yes,  sir. 

Q.  And  also  as  regards  the  loss  of  capital  to  the  Stair  by 
reason  of  the  enforcement  of  our  tax  laws  in  relation  to  personal 
property  —  property  of  corporations  principally?  A.  With  regard 
to  that  last  point,  I  will  take  that  up  first,  because  it  is,  so  far 
as  my  general  views  go,  very  briefly  disposed  of;  in  proportion 
;is  any  State  has  inefficient  tax  laws  upon  personal  property,  it 
will  invite  the  immigration  of  capital,  and  the  wealth  of  that 
State  will  be  thereby  increased;  in  proportion  as  it  has  efficient 
tax  laws  upon  personal  property,  it  will  drive  out  wealth,  and 
the  wealth  of  the  State  will  be,  therefore,  diminished;  this  is 
proven  by  the  experience  of  all  States  which  have  tried  it;  every- 
one who  is  at  all  familiar  with  financial  affairs,  so  far  as  they  are 
affected  by  taxes,  knows  very  well  that  all  men  who  have,  say  over 


145 

$  100,000  in  value  are  constantly  on  the  lookout  for  places  where 
they  may  invest  personal  property  free  of  taxes,  or  under  a  low 
tax,  and  for  every  change  which  is  made  in  the  laws  of  a  State 
concerning  the  taxation  of  personal  property,  there  is  a  change 
in  the  situs  of  that  property;  when  the  change  is  in  the  direction 
of  easier  taxation  property  flows  into  that  State;  very  few  such 
changes  have  taken  place;  the  only  one  that  I  can  recollect  now 
is  the  exemption  of  mortgages  from  taxation  in  Massachusetts, 
which  took  place  about  ten  years  ago,  and  which  resulted  in  a 
large  increase  of  investment  in  mortgages  and  a  reduction  in  the 
rate  of  interest;  almost  all  changes  in  the  last  ten  or  fifteen 
years  have  been  in  the  direction  of  severity,  and  in  every  case 
capital  has  either  actually  or  nominally  fled  from  the  State;  I 
recollect  a  very  striking  instance  of  that  land  when  the  new 
constitution  of  California  was  adopted,  which  was  framed  by  a 
farmers'  convention;  it  was  the  object  to  reach  every  kind  of 
personal  property,  and  accordingly  they  provided,  I  think  in 
express  terms,  in  the  constitution  itself,  that  the  stock  of  a  cor- 
poration should  be  taxed  as  well  as  the  property  of  the  corpora- 
tion, and  they  expressly  overruled  a  decision  of  the  Supreme 
Court  of  the  State,  which  held  that  taxation  on  mortgages  was 
double  taxation;  they  provided  that  mortgages  should  be  sub- 
ject to  taxation;  the  first  Legislature  to  meet  under  that  under- 
took in  good  faith  to  carry  out  that  scheme,  and  my  attention 
was  called  to  it  at  that  time;  I  was  not  so  much  interested  in 
matters  of  local  taxation,  but  it  happened  in  this  way;  I  don't 
mind  telling  incidents  in  my  own  experience,  although  I  should 
not  like  to  tell  them  in  regard  to  a  client;  I  happened  to  buy  for 
the  first  and  last  time  some  Central  Pacific  railroad  stock,  which 
was  paying  dividends  regularly;  I  thought  it  was  a  good  invest- 
ment; when  the  certificate  was  delivered  to  me  by  the  broker,  I 
found  that  instead  of  the  broker's  name  being  on  it,  which  I 
should  not  have  minded,  or  may  name,  there  was  the  name  of  I 
forget  what  —  John  Smith  will  do  as  well  as  anything  else  —  so 
I  called  in  the  broker  and  said,  "How  is  this,  I  don't  know  who 
John  Smith  is,  and  he  will  colled  the  dividends"  —  I  think 
19 


146 


quarterly  dividends  were  paid  then  —  "  and  how  am  I  to  get  them 
from  him;"  the  broker  laughed  and  said,  "You  will  see;  there 
are  coupons  for  the  dividends;  "  I  said,  "  Whoever  heard  of  coupons 
for  dividends; "  he  said,  "Nobody  until  this  new  law  was  adopted 
in  California; "  then  he  explained  that  as  soon  as  this  law  was 
passed  the  Central  Pacific  Railroad  Company  put  all  the  stock 
of  their  corporation  which  they  could  get  hold  of  —  and  it  was 
in  very  few  hands  —  into  the  names  of  five  clerks  of  the  corpora- 
tion; they  passed  a  by-law  by  which  dividends  were  to  be  paid 
only  upon  presentation  of  coupons,  and  the  registered  holders  were 
not  to  get  the  dividends;  then  they  sent  those  five  clerks  out  of 
the  country  —  scattered  them  around,  and  gave  them  instructions 
that  they  would  receive  a  salary,  and  they  were  to  report  to  some 
person  whose  address  they  had,  and  to  take  good  care  never  to 
report  to  the  head  office;  all  the  stock  was  put  in  their  names; 
they  disappeared;  the  assessors  came  around  at  the  proper  time 
to  the  office,  found  the  names  of  all  the  stockholders,  and  then 
asked  their  addresses;  the  officers  gave  them  their  last  address 
which  the  men  had  given  them ;  the  assessors  came  back  and  said 
they  could  not  find  them;  the  officers  smiled,  and  said  they 

could  not  either,  and  the  result  was  that  the  State  of  California 
i 

never  got  one  cent  of  tax  on  the  stock  of  the  Central  Pacific  Rail- 
road Company,  representing  a  great  many  millions  of  dollars, 
and  I  have  known  other  cases. 

Q.  That  corporation  paid  no  dividends  at  that  time?  A.  It 
did  pay  dividends. 

Q.  The  stock  is  not  worth  over  thirty?  A.  That  is  a  very  true 
thing ;  I  paid  ninety  for  that  stock  and  sold  it  again. 

By  the  Chairman. 

Q.  What  did  you  do  about  the  payment  of  the  tag  on  the  stock 
that  you  owned?  A.  I  never  paid  any;  no  officer  of  California 
ever  suspected  that  I  held  it,  and  I  was  not  going  to  volunteer 
the  information, 

Q.  You  were  conscious  of  the  fact  that  you  were  the  owner?  A. 
I  thought  I  was  as  long  as  I  had  those  coupons;  I  got  my  divi 


147 

dends  clear  of  all  taxes;  the  State  of  California  tried  that  for  sev- 
eral years,  and  every  other  corporation  that  was  paying  dividends 
adopted  this  same  plan,  and  after  the  first  year  the  State  of  Cali- 
fornia did  not  get  one  cent  out  of  this  tax  on  the  stock  of  cor- 
porations; there  were  no  California  stockholders;  that  was  a  case 
where  the  entire  capital  emigrated  either  in  form  or  in  fact,  the 
result  of  which  was  that  notwithstanding  the  explicit  declara- 
tion of  the  constitution,  the  Legislature  finally  passed  an  act,  with 
a  preamble,  which  is  quite  unusual  in  those  days,  declaring  it 
was  unjust  and  impossible  to  collect  a  tax  on  the  stock  of  cor- 
porations, the  property  being  taxed,  and  therefore  they  repealed 
the  law  which  the  constitution  required  them  to  pass;  that  is  an 
illustration  of  the  very  strongest  kind  as  to  the  way  in  which 
capital  will  actually  or  ostensibly  emigrate  when  it  is  taxed  by 
the  most  ingenious  devices;  the  State  of  California  has  had  some 
other  remarkable  experiences;  it  undertook  to  tax  honey  and 
butter,  and  required  a  return,  and  although  there  was  a  return 
in  several  hundred  thousand  cases  there  was  the  most  ^reat 
scarcity  of  butter  ever  known,  and  only  five  or  six  counties  had  any 
honey  at  all;  there  were  forty  counties  that  had  bee  hives;  the 
bees  could  be  seen  flying  around,  but  honey  was  returned  by  a 
separate  return,  and  there  were  only  four  counties  that  had  a. 
pound  of  honey;  so  you  can  see  that  the  honest  farmer  is  quite  as 
shrewd  in  evading  taxation  as  the  dishonest  citizen ;  I  suppose  the 
bees  flew  off  with  all  their  honey;  Ohio  has  tried  this  experiment 
for  forty  years;  it  has  had  one  of  the  most  stringent  systems  ever 
devised  for  personal  property;  the  result  of  it  is  extraordinary; 
carriages  are  set  on  wheels,  and  they  seem  to  fly  from  the  State 
every  year,  and  watches  which,  like  French  clocks,  are  supposed 
to  go,  have  manifested  their  power  to  go  every  year  since,  and 
most  particularly  in  the  large  cities;  it  is  affected  with  a  destitu- 
tion of  watches  calamitous  to  think  of. 

By  Mr.  Creamer. 

Q.  How   about   Pennsylvania?    A.  Thje   city   of   Philadelphia 
returns  watches. 


14:8 

Q.  I  mean  the  State  in  its  collections  for  personal  property  on 
corporations  A.  I  have  not  studied  that. 

Q.  The  aggregate  is  $5,000,000?  A.  Of  course,  you  can  get  a 
great  deal  from  personal  property;  the  State  of  Massachusetts 
gets  a  great  deal  from  personal  property. 

Q.  Does  it  on  mortgages?  A.  Yes,  sir;  Philadelphia  I  don't 
know  about ;  Boston  I  understand  something  about. 

Q.  The  State  of  Massachusetts  is  rather  a  fair  example  for  us  to 
follow  in  many  case;  they  have  nearly  as  large  a  sum  on  their 
personal  assessment-roll  as  this  city?  A.  Over  200,000,000. 

Q.  And  this  city  about  300,000,000?    A.  Yes,  sir. 

Q.  It  has  been  less  than  that?    A.  Yes,  sir. 

Q.  In  proportion  to  the  population  and  wealth  there  should  be 
a  much  larger  sum  on  the  books  in  this  city?  A.  Yes,  sir;  very 
much;  they  get  it,  and  the  only  way  you  can  ever  get  anything  Me 
a  full  statement  of  the  amount  of  personal  property;  after  they 
send  out  lists  all  around  to  all  the  taxpayers,  some  of  whom  return 
and  some  do  not;  the  assessors  are  remarkably  intelligent  and 
trustworthy,  and  one  body  of  men  have  been  in  office  for  a  long 
time;  I  am  not  saying  anything  against  the  men;  as  compared 
with  all  cities,  the  assessors  of  Boston  stand  high,  particularly 
Mr.  Hills,  who  has  been  in  office  for  many  years,  a  man  entirely 
unsuspected  of  anything  crooked,  and  the  system  has  therefore 
been  administered  by  thoroughly  honest,  upright  and  efficient 
men;  it  has  had  an  ideal  enforcement. 

Q.  How  large  a  force  have  they;  have  you  any  knowledge? 
A.  I  am  not  sure,  but  I  think  they  have  about  fifteen  who  might 
be  called  head  men  under  Mr.  Hills. 

Q.  The  same  as  our  deputies  here?    A.  Yes,  sir. 

Q.  We  have  thirteen;  do  you  think  that  is  sufficient?  A.  I 
don't  believe  that  makes  any  difference;  you  might  employ  300 
men,  and  I  think  the  result  would  be  you  would  be  no  better  off. 

Q.  Do  you  think  that  one  man  taking  a  district  embracing  six 
wards  of  this  city  —  to  assess  the  property  of  those  six  wards 
from,  say  the  first  Monday  of  September  until  the  second  Monday 
of  January  —  do  you  think  one  man  can  cover  that  ground  suf- 


149 

ficiently  well  to  give  satisfaction?  A.  You  mean  to  assess  and 
ascertain  personal  property? 

Q.  No;  real  estate  and  personal  as  well?  A.  I  think  one  such 
man,  by  devoting  his  entire  time,  could  ascertain  the  value  of  the 
real  property  fairly  well;  it  is  impossible  for  him  to  ascertain 
the  value  of  the  personal  property  or  come  anywhere  near  it; 
but  the  gentlemen  in  Boston  do  not  attempt  that;  the  way  they 
do  is,  they  send  out  lists,  and  each  of  the  taxpayers  is  required 
to  sign  it,  but  the  assessors  are  very  glad  if  the  taxpeyers  do  not 
sign  those  lists,  for  this  reason,  that  if  they  do  sign  them,  they 
are  bound  by  that  evidence  unless  they  can  produce  positive 
evidence  as  to  their  falsity;  if  they  do  not,  the  assessors  estimate 
for  themselves,  and  there  is  no  appeal,  and  they  meet  in  what 
is  called  the  dooming  chamber  —  very  properly  too  —  and  there 
they  sign  the  doom  of  every  man  and  estimate  the  value  of  his 
property,  without  any  evidence,  a  statement  or  anything  at  all; 
I  was  most  surprised  to  find  that  the  assessors  of  Boston  have 
actually  evidence  as  to  only  $40,000,000  of  personal  property  in 
the  entire  city;  that  is  all  they  have  any  evidence  of;  they  pro- 
ceed to  that  $160,000,000  by  pure  guesswork;  in  that  way  they 
get  up  a  very  creditable  showing  of  $200,000*000;  of  course,  if 
you  put  in  the  hands  of  the  commissioners  here  similar  powers, 
I  suppose  they  can  add  three  or  four  or  five  hundred  millions 
to  the  personal  property  of  this  city. 

Q.  Does  an  income  tax  still  prevail  in  Massachusetts?  A.  Yes, 
sir;  and  it  is  admitted  by  everybody  to  be  a  farce;  it  is  only  paid 
by  exceptionally  honest  men.  ' 

By  the  Chairman. 

Q.  What  do  you  think  of  the  law  that  gives  such  discretionary 
powers  to  assessing  officers?  A.  I  think  it  is  grossly  unjust; 
it  is  better  suited  for  Turkey  or  Russia  or  Tartary  than  it  is  for 
the  United  States  of  America;  now,  speaking  of  Boston  reminds 
me  of  another  instance  of  emigration  of  capital ;  the  Boston  people 
know  there  is  an  abundance  of  that;  Nahant  is  full  of  people 
who  have  gone  there  to  avoid  taxation  in  Boston;  Cottage  City, 


150 


which  is  perhaps  the  wealthiest  town  or  little  village  on  Martha's 
island,  is  one  of  the  wealthiest  towns  in  Massachusetts,  becau 
people  keep  their  summer  residences  there,  and  return  themselves 
for  taxation;  but  the  most  remarkable  instance  is  the  little  town 
of  Lancaster;  two-thirds  of  all  the  expenses  of  that  town  art1 
paid  by  a  single  man,  who  left  Boston  because  he  was  assessed 
at  a  very  high  rate,  and  he  entered  into  an  agreement  with  the 
village  of  Lancaster  that  if  they  would  always  put  his  assessment 
down  at  a  very  low  rate  —  they  had  to  return  something  011 
.account  of  the  State  officers  —  he  would  pay  about  two-thirds 
of  all  the  expenses  of  the  town,  and  when  they  want  a  new  bridge-, 
or  to  repair  one,  they  go  to  this  gentleman;  he  has  his  owrn  con- 
tractors estimate  for  the  repair,  and  asks  the  town  authorities 
in  what  style  they  want  it  restored,  and  he  pays  for  it,  and  it 
does  not  appear  in  the  town  bills  at  all;  he  saves  about  $25,000  on 
these  taxes  in  Boston;  Mr.  Weld  was  in  Boston;  they  assessed 
him,  I  think,  some  three  or  four  million  dollars;  he  protested; 
they  gave  him  the  option  of  swearing  off;  he  refused  to  swear 
off,  paid  the  taxes  that  time  and  went  to  Philadelphia  where  he 
died;  his  estate  amounted  to  $20,000,000;  he  had  done  nothing 
since  the  time  he  left  Boston. 

Q.  Did  he  fare  any  better  on  taxes?    A.  Yes,  sir. 

Q.  By  fixing  it  with  the  officials  there?  A.  No;  he  was  not 
particularly  known,  and  lived  in  modest  style;  he  was  wise 
enough  not  to  improve  the  front  of  his  house. 

Q.  They  have  very  stringent  laws  there;  you  say  he  did  not 
improve  the  front  of  his  house  in  Philadelphia?  A.  Yes,  sir. 

Q.  That  was  one  reason  he  was  not  taxed?  A.  Yes,  sir;  any 
man  is  a  fool  that  improves  the  front  of  his  house. 

Q.  Isn't  that  a  law  generally  in  Massachusetts?  A.  Yes,  sir; 
but  it  is  administered  by  different  men,  and  Mr.  Hills  and  hi 
associates  are  men  of  remarkable  efficiency  in  every  way;  in  the 
town  of  Lancaster  they  would  vote  any  man  out  who  interfered 
with  this  gentleman's  taxes;  they  would  not  have  it;  4ie  mighl 
emigrate. 


151 

Q.  He  was  a  public  benefactor?    A.  Yes,  sir;  a  philanthropist. 

Q.  In  Boston  is  it  not  a  fact  that  the  assessment  is  higher  in 
proportion  to  the  value  than  any  other  city?  A.  Not  to  any 
other,  but  very  much  higher  than  in  the  city. 

Q.  Isn't  that  a  safer  rule  than  the  one  that  now  prevails?  A. 
Well,  I  think  it  would  be  a  good  rule  'to  assess  all  real  estate  at 
its  real  fair  value;  I  do  not  think  it  would  be  right  to  assess  it 
for  more  than  it  would  sell  for  at  auction,  because  if  the  State 
enforced  those  rates  it  could  only  do  that. 

Q.  Of  course,  the  rate  would  be  much  less,  perhaps  one-half; 
it  would  be  safer?  A.  Yes,  sir. 

Q.  Do  you  think  it  would  give  better  satisfaction  than  to 
enforce  the  law  as  it  is  now?  A.  If  you  speak  of  real  estate; 
yes,  sir. 

Q.  In  every  county?    A.  Yes,  sir. 

Q.  To  what  do  you  attribute  the  loss  of  population  in  nearly 
one-half  of  the  counties  of  this  State  during  the  last  twelve 
years,  because  the  census  from  1880  to  1890  shows  a  decrease  in 
population  in  twenty- three  counties  of  this  State?  A.  I  believe 
it  to  be  mainly  the  result  of  systems  of  taxation  in  this  country, 
but  I  do  not  confine  it  to  the  system  of  taxation  in  this  State, 
taking  the  whole  system  of  taxation  in  the  United  States,  I 
think  the  pressure  is  constantly  greater  upon  the  rural  districts 
than  the  city. 

Q.  You  mean  the  national  taxation?    A.  Yes,  sir. 

Q.  That  the  national  taxation  is  the  principal  cause?  A.  The 
whole  system  of  national  taxation,  which  is  indirect  taxation,  I 
think  bears  with  peculiar  severity  upon  the  farming  population. 

Q.  Take  Lewis  county  in  this  State,  how  would  it  affect  that? 
A.  That  is  a  farming  poulation;  you  ask  me  the  questions; 
understand  I  did  not  volunteer  to  talk  about  national  matters. 

Q.  We  would  like  to  know;  there  must  be  something  wrong? 
A.  I  am  very  well  satisfied  that  the  effect  of  indirect  taxation  is 
to  decrease  the  price  of  everything  the  farmer  sells;  and  to  increase 
the  price  of  everything  he  buys,  and  as  our  national  revenue  is 
collected  entirely  by  indirect  taxation  he  suffers  most. 


152 

Q.  Does  that  decrease  the  value  per  acre  of  his  land?  A.  Cer- 
tainly, because  his  produce  sells  for  less,  and  there  is  less  encour- 
agement for  people  to  go  there. 

By  the  Chairman. 

Q.  Were  you  familiar  with  the  terms  of  the  biti  which  was 
before  the  Legislature  last  winter  known  as  the  Connolly  bill? 
A.  Yes,  sir;  I  had  something  to  do  with  that 

Q.  What  do  you  think  of  the  provisions  of  that  bill,  as 
to  the  methods  of  taxation  proposed  by  it?  A.  I  thought  it 
was  a  very  fair  and  just  compromise  between  the  interests  of 
the  State  and  the  city,  or  the  supposed  interests  of  the  State  and 
City,  recognizing  the  fact  that  farmers  everywhere  are  bent  upon 
taxing  personal  property,  and  can  not  be  convinced  of  what  is 
undoubtedly  a  fact  that  the  more  we  tax  it  the  larger  will  be  their 
share  of  the  taxes;  it  appears  to  me  that  the  best  solution  is  to 
separate  the  methods  of  taxation  and  to  collect  the  State  taxes 
in  a  way  satisfactory  to  the  interior  of  the  State,  and  to  collect 
the  local  taxes  in  a  manner  satisfactory  to  the  people  of  the 
locality;  that  it  would  avoid  this  constant  friction,  the  waste  of 
time  in  every  Legislature,  and  the  attempt  to  pass  laws  which  if 
passed  would  be  entirely  ineffective,  and  which  if  effective  would 
produce  very  little  difference  in  State  taxes,  because  State  taxes 
are  relatively  small,  and  that  the  farmers  might  have  any  kind 
of  taxation  they  wanted  for  State  purposes,  and  the  city  could 
have  any  kind  they  wanted  for  local  purposes. 

Q.  Counties,  not  cities?  A.  Yes,  sir;  counties;  of  course  we 
had  to  make  it  for  counties,  because  there  *w  as  some  doubt  as  to 
whether  the  Legislature  would  listen  to  a  proposition  to  enable 
cities  to  separate  themselves  from  counties. 

Q.  You  said  the  farmers  could  have  such  taxes  as  they  wanted 
for  State  purposes?  A.  Yes,  sir. 

Q.  Didn't  you  intend  to  say  for  local  purposes?  A.  No,  sir;  I 
will  re-state  it,  as  far  as  the  interests  of  the  farmer  conflict  with 
the  interest  of  citizens,  as  I  might  call  them;  that  is,  men  living 
in  cities;  the  farmer's  interest  and  the  fajnner's  wishes  would  be 


153 

abundantly  protected  by  a  system  which  should  be  uniform  all 
over  the  State  so  far  as  State  purposes  were  concerned,  but  as  far 
as  the  taxation  of  those  counties  which  include  large  cities  is 
concerned,  there  is  no  reason  why  the  farmers  should  trouble 
themselves  about  the  method  of  taxation  which  we  adopt  in  those 
large  cities,  and  the  counties  which  include  them;  therefore  it 
seems  to  me  that  if  New  York  and  Kings  and  Erie,  for  example, 
which  are  substantially  large  cities,  that  if  they  should  wish  to 
exempt  personal  property,  as  I  believe  they  would,  there  is  110 
reason  in  the  world  why  the  farmers  should  not  allow  it  as  long 
as  those  counties  pay  as  large  a  share  of  the  State  tax  as  they 
would  if  they  tax  personal  property. 

By  Mr.  Gifford. 

Q.  If  a  law  of  this  kind  had  the  effect  to  exempt  personal  prop 
erty  in  the  city,  what  effect  would  that  have  on  the  county  adjoin- 
ing the  city;  the  idea  is  local  option,  I  believe,  to  give  the  bo:  in  I 
of  supervisors  of  rural  counties  the  right  to  fix  their  basis  of  taxa- 
tion; now,  suppose  you  do  exempt  it  in  the  cities,  what  will  be 
the  demand  of  the  capitalists  in  the  rural  districts  adjoining  those 
cities?  A.  If  he  is  a  sensible  man  he  will  say  in  Westchester:  "  It 
is  a  very  good  law,  I  want  you  to  follow  it." 

Q.  Would  not  that  system  in  the  end  spread  over  the  entire 
State?  A.  I  think  it  would;  I  think  the  people  would  see  how 
good  it  was. 

Q.  You  mean  the  personal  property  owners  of  the  different 
counties  would  see  how  good  it  was  to  avoid  taxation  and  place 
it  all  on  the  real  estate?  A.  No,  sir;  I  mean  that  the  real  estate 
owners  would  see  the  advantage  of  having  an  honesit  system  of 
taxation  efficiently  collected  by  exempting  personal  property. 

Q.  Please  give  us  your  reasons?  A.  With  pleasure;  in  the  first 
place,  there  never  was,  and  there  is  not  to-day,  and  there  never 
can  be,  a  system  devised  by  which  direct  taxes  on  personal  prop- 
erty can  be  honestly  and  efficiently  collected. 

Q.  That  simply  shows  that  there  is  a  method  through  which 
they  can  evade  the  law,  but  would  not  a  law  requiring  the  col- 
20 


154 


lection  of  taxes  from  that  property  be  just;  that  is  the  point? 
A.  I  question  nothing  about  that;  I  am  a  good  deal  of  a 
man;  there  are  people  who  think  I  am  a  theorist,  but  they  ar< 
much  mistaken;  I  believe  that  that  which  can  not  be  done  is  a, 
thing  which  is  not  right  to  do;  I  believe  that  is  what  nature  tells, 
us;  we  do  not  know  what  is  right  or  wrong;  we  try  to  do  by 
experience  the  things  we  run  our  heads  up  against. 

Q.  Would  not  the  relieving  of  all  personal  property  from 
taxation  increase  the  taxes  upon  all  real  estate?  A.  Yes,  sir. 

Q.  Is  it  not  a  fact  that  the  records  show  in  this  State  that 
agricultural  property  is  only  earning  about  three  per  cent  while 
your  personal  property  is  earning  double  that  amount?  A.  That 
I  do  not  know ;  I  should  think  the  fanners  would  all  sell  out. 

Q.  Don't  you  know  that  five-sixths  of  the  costs  of  all  suits 
in  the  civil  courts  are  incurred  for  litigation  in  defense  of 
personal  property,  and  the  additional  fact  is  that  that  burden 
is  assessed  upon  real  estate,  ninety  per  cent  of  it,  on  account  of 
the  evasions  of  capital?  A.  I  have  no  figures  in  my  possession 
with  which  to  contradict  the  statement,  I  would  be  willing  for 
the  purposes  of  the  present  discussion,  to  concede  it,  though  I 
do  not  think  it  is  quite  so,  but  I  am  prepared  to  let  it  pass 
without  dispute;  I  am  willing  to  proceed  upon  that  assumption; 
I  have  said  it  always  has  been  impossible  to  collect  the  taxes 
honestly  upon  personal  property;  eighteen  years  ago,  Mr.  George 
Andrews,  chairman  of  the  board  of  assessors  here,  I  think,  cer- 
tainly a  prominent  officer  conected  with  taxation,  reported  that 
which  is  just  as  true  now,  that  nobody  need  pay  any  taxes  on 
personal  property  except  widows  and  orphans  and  other  people 
whose  property  was  held  in  trust;  the  property  of  widows  and 
orphans  is  held  by  trustees,  and  a  good  American  is  never  willing 
to  perjure  his  soul  when  there  is  nothing  to  make  out  of  it, 
and  when  trustees  can  not  make  anything  out  of  it,  they  are  liable 
to  tell  the  truth. 

Q.  Do  you  think  that  a  law  to  reach  personal  property  is 
temptation  to  men  to  perjure  themselves  in  making  their  returns? 
A.  I  do,  universally. 


155 

Q.  Do  you  think  it  is  any  worse  for  a  man  to  be  a  perjurer 
than  it  is  to  be  a  thief?  A.  Yes,  sir;  I  think  it  is  the  distinction 
of  this  country  and  of  one  or  two  countries  like  it,  and  the  race  to 
which  we  belong;  I  don't  want  to  be  invidious  about  other  races, 
but  it  is  a  distinction  that  as  a  race  we  are  more  truthful  than 
other  races,  and  I  think  that  is  the  secret  of  the  primacy  that 
America  is  retaining,  and  when  it  leaves  its  truthfulness  it 
will  go. 

Q.  Do  you  not  think  that  everything  that  demands  protec- 
tion at  the  hands  of  the  law  shall  be  compelled  by  law  to  pay  its 
share  of  the  burden?  A.  I  think  it  does;  to  proceed  with  the 
reason  why  it  is  unjust  to  tax  personal  property;  there  is  a 
very  great  mistake  as  to  what  personal  property  is;  two-thirds  of 
all  that  is  commonly  called  personal  property  is  nothing  but  a 
revision  of  real  estate;  here  Mr.  Gould  died  the  other  day,  and  he 
is  reported  to  have  had  f 70,000,000  of  personal  property;  if  by 
personal  property  you  mean  what  the  law  means  really,  chattels 
and  things  not  attached  to  land,  he  had  not  $70,000,000;  he  may 
have  had  $700,000;  he  may  have  had  two  or  three  millions  dollars 
of  property  in  chattels;  I  doubt  very  much;  he  had  nothing 
like  $70,000,000;  what  did  he  have?  he  had  large  quantities  of 
stocks  and  bonds  secured  by  mortgage;  what  is  stock?  every 
farmer  thinks  stock  is  personal  property;  the  law  calls  it  so, 
but  you  can  not  make  a  thing  personal  property  by  calling  it  so; 
stock  is  nothing  but  a  title  to  a  piece  of  corporate  property, 
which  in  nine  cases  out  of  ten  is  real  estate;  take  stock  in  a 
railway  company;  the  stock  of  every  railway  company  in  this 
State  represents  nothing  in  the  world  except  the  right  to  run 
its  road  over  a  piece  of  land;  the  value  of  the  privilege;  in  other 
words,  the  land  value  or  the  ground  rent;  that  is  all  there  is  to 
the  stock  of  any  railroad  company  in  this  State  that  I  know  of ; 
that  is  all  there  is  to  the  stock  of  nine-tenths  of  the  railroad 
companies  in  the  United  States;  the  stock  represents  nothing  but 
the  franchise,  and  that  is  the  privilege  of  running  over  a  piece  of 
land;  all  the  equipment  is  paid  for  in  bonds;  the  depots,  the  rails, 
even  the  gradings  are  paid  for  in  bonds;  the  certificates  of  stock, 


156 


therefore,  represent  nothing  in  the  world  except  the  value  of  the 
strip  of  land;  take  a  telegraph  company;  you  would  think  that  is 
surely  a  specimen  of  something  that  is  all  personal  property,  and 
the  telegraph  companies  are  sharp  enough  to  persuade  you  that 
the  whole  franshise  of  a  telegraph  company,  the  whole  value  o 
the  $80,000,000  of  the  Western  Union  stock  is  nothing  in  the 
world  but  the  value  of  stringing  those  wires  over  people's  laud. 

Q.  No  value  on  account  of  the  dividends?  A.  It  comes  out  of 
that  land  value  which  it  owns. 

Q.  It  is  the  earnings  of  the  people  that  pays  dividends?  A. 
They  are  taken  out  of  the  people  who  pay  the  high  prices  ro  the 
Western  Union  company,  because  the  Western  Union  company 
owns  a  practical  monopoly  over  those  pieces  of  land;  it  is  really 
a  real  estate  value;  but  when  you  come  to  the  railroad  com 
panies,  every  man  knows  that  the  stock  of  nine-tenths  of  the 
companies  of  the  United  States  does  not  represent  one  dollar 
of  furniture  or  equipment,  or  anything  that  a  business  man  would 
call  personal  property;  it  represents  nothing  but  the  long  strip 
of  land  over  which  they  have  a  right  to  run  their  cars;  take  all 
that  out  of  the  list  of  personal  property. 

By  Mr.  Creamer. 

Q.  Did  you  read  the  will  of  Mr.  Gould?    A.  No,  sir;  I  did  not. 

Q.  I  call  your  attention  to  it;  you  say  he  was  not  worth  any 
such  sum  as  $500,000  or  $700,000;  he  left  $5,000,000  to  his  sou? 
A  I  said  he  was  not  worth  $700,000  in  strict  personal  property. 

Q.  And  $15,000,000  to  the  other  members  of  the  family;  it  said 
dollars?  A.  If  you  suppose  when  he  died  he  had  in  his  own 
possession  $500,  I  know  enough  of  his  habits  to  know  that  he 
did  not. 

Q.  He  always  had  in  his  reach?    A.  How  many  dollars? 

Q.  He  had  enough  to  command  all  the  best  attorneys  when  he 
wanted  them?  A.  Very  true,  but  not  with  dollars;  I  never  knew 
Mr.  Gould  to  pay  a  lawyer  one  dollar,  but  he  did  pay  them  with  a 
piece  of  paper  which  represented  property. 


157 

By  the  Chairman. 

Q.  I  will  ask  you  to  state  as  briefly  as  you  can  whatever 
would  suggest  in  response  to  the  first  purpose  of  this  inquiry; 
the  first  purpose  of  this  inquiry  is  to  inquire  into  the  propriety 
of  modifying  the  present  laws  relating  to  taxation,  assessment 
and  interest  so  far  as  they  affect  the  agricultural,  manufactur- 
ing, commercial,  labor,  banking  and  other  interests  of  the  State; 
now,  what  I  would  like  to  have  you  state  to  the  committee  is  what 
modification,  if  any,  you  can  suggest  for  the  purpose  of  being 
embodied  in  proposed  legislation?  A.  It  seems  to  me  that  the 
practical  thing  to  do  is  to  provide  a  system  of  taxation  of  the 
rural  counties  which  will  be  satisfactory  to  them,  and  a  taxation  for 
the  city  counties  which  will  be  satisfactory  to  them ;  it  is  my  belief 
that  if  you  were  to  poll  the  citizens  of  New  York  and  Brooklyn,  a 
majority  of  all  the  electors  in  each  county,  a  majority  of  the  tax- 
payers, and  a  majority  of  all  the  owners  of  real  estate  in  each 
county,  whether  counted  by  the  head  or  by  value,  would  vote  tr 
exempt  in  those  two  cities  all  personal  property  from  taxation,  and 
would  be  perfectly  willing  to  leave  the  question  to  real  estate; 
I  am  myself  much  more  interested  in  real  estate  than  in  persona) 
property  of  any  kind,  two-thirds  of  all  that  I  have  is  invested  ir 
land,  but  I  would  vote  to-day  to  abolish  all  taxation  upon  persona7 
property  of  every  kind,  and  put  it  on  my  land;  now,  it  seems  to 
me  that  is  the  proper  thing  to  do;  if  the  people  in  the  country  can 
not  be  convinced  that  is  a  good  thing  to  exempt  it  all  over  the 
State,  and  the  people  of  the  cities  are  convinced  that  it  is  a  good 
thing,  why  not  collect  the  State  tax  in  another  manner,  and  let  the 
cities  collect  their  tax  from  real  estate  alone  as  they  will  choose ;  of 
course  I  have  no  authority  to  make  the  offer,  but  it  is  my  belief 
that  if  the  Legislature  of  this  State  were  to  give  to  the  people 
of  those  two  cities  the  choice  between  the  present  system  or 
between  the  expediency  of  a  law  which  should  enable  the  two 
cities  to  exempt  personal  property  from  taxation  upon  condition 
that  the  value  of  real  estate  for  the  purpose  of  State  taxation 
should  be  increased  by  one  third  in  order  to  equalize  it  with  the 


158 

taxation  on  personal  property  in  the  interior,  that  the  people  of 
those  two  cities  would  accept  such  a  law  as  that. 

Q.  Would  you  be  in  favor  of  a  law  which  would  give  to  the 
local  authorities  the  power  to  raise  taxes  for  local  purposes  in 
such  a  way  as  to  them  seemed  best?  A.  Within  a  reasonable 
radius;  I  would  give  local  authorities  the  power  to  collect  taxes 
by  direct  taxation  only  upon  the  value  of  real  and  personal 
property  together,  if  they  saw  fit,  or  upon  the  value  of  real 
property  alone,  if  they  saw  fit,  or  personal  property  alone,  if  they 
saw  fit,  or  finally  upon  ground  rights  if  they  saw  fit. 

Q.  You  are  in  favor  of  local  option?    A.  Yes,  sir;  entirely. 

Q.  How  would  you  propose  to  raise  taxes  for  the  support  of 
the  State  government?  A.  As  a  compromise,  by  continuing  the 
assessment  on  personal  property  in  the  cities,  or  by  adopting 
some  additional  estimate  of  the  value  of  personal  properties  in 
the  two  cities  of  an  arbitrary  character  which  would  assess  them 
at  a  larger  amount  than  they  are  assessed  now ;  for  example,  here 
in  the  city  of  New  York,  |320,000,000;  I  can  not  state  for  New 
York  as  I  can  for  Brooklyn,  but  I  feel  very  confident  that  the 
people  of  New  York  city  would  rather  accept  an  arbitrary  esti- 
mate of  |500,000,000  for  their  personal  property  and  submit  to 
an  assessment  as  far  as  State  taxes  were  concerned,  but  limit 
this  entirely  to  real  estate,  than  go  on  under  the  present  system; 
I  am  sure  it  would  be  wise  to  do  so  and  I  know  I  can  speak  for 
some  real  estate  owners. 

Q.  How  would  you  divorce  the  two?  A.  We  don't  make  it 
up  in  the  city;  it  is  made  i^p  for  us  and  sent  down;  the.  State 
says  you  must  collect  so  much  money;  why  not  collect  it  as  you 
see  best. 

Q.  Would  you  levy  that  as  a  separate  assessment  or  embody  it 
all  in  one?  A.  It  would  go  to  the  officers  of  this  city  as  a 
separate  matter,  and  then  let  them  collect  in  the  way  the  people 
saw  fit. 

By  Mr.  Hamilton. 

Q.  The  total  equalized  value  is  fl, 545,000  real  and  personal? 
A.  The  State  equalizes  realty,  I  believe,  and  does  not  personal. 


159 

By  the  Chairman. 

Q.  It  has  been  suggested  here,  and  I  think  agreed  upon  by 
all  the  witnesses  who  have  preceded  you,  that  the  expenses  of 
the  general  government  of  the  State  should  be  raised  from 
sources  other  than  real  estate;  what  do  you  say  to  that  proposi- 
tion; in  other  words,  that  real  estate  should  be  relieved  altogether 
Tom  a  tax  for  the  support  of  the  general  government?  A.  I 
think  that  would  be  better  than  the  present  .system;  I  don't  think 
.t  is  the  best  system. 

Q.  You  think  it  would  be  an  improvement?  A.  Yes,  sir;  a 
great  improvement,  provided  the  country  members  do  not  insist 
upon  forcing  us  in  the  cities  to  go  on  pretending  to  assess  a  tax 
on  personal  property,  when  we  can  not  do  it  and  don't  want  to 
do  it. 

Q.  We  are  trying  to  get  at  the  best  method  of  raising  money 
for  the  expense  of  the  government,  without  any  regard  to  the 
views  of  the  country  members  or  city  members?  A.  Then  the 
best  method  is  to  make  up  an  assessment  for  the  cities  based 
upon  such  an  estimate  of  the  personal  property  in  the  city  as 
the  officers  shall  make,  and  then  to  leave  us  to  collect  it  as  we 
see  proper;  that  is  to  say  upon  real  estate. 

Q.  The  next  purpose  of  the  inquiry  seems  to  be  as  to  whether 
capital  has  been  or  is  being  driven  from  this  State  by  restric- 
tions affecting  corporations,  and  if  in  your  opinion  it  has  been 
what  remedy  do  you  suggest?  A.  In  the  first  place,  I  think  there 
can  be  no  doubt  that  a  very  large  number  of  corporations  have, 
in  recent  years,  been  created  in  other  States,  which  really  do 
business  in  this  State;  it  seems  to  me  that  there  is  an  increasing 
tendency  to  that;  the  reason  of  that  is  partly  that  the  taxation 
is  lighter  in  those  other  States,  and  partly  for  a  reason  not  affected 
by  taxation;  that  the  laws  of  New  York,  with  regard  to  corpo- 
rations, are  in  some  respects  very  severe  and  needlessly  so;  for 
example,  it  is  the  law  that  every  corporation  organized  under 
the  manufacturing  law  must  have  all  its  stock  paid  in;  every 
stockholder  is  liable  over  again  for  the  amount  of  his  stock, 
although  he  has  paid  in  every  dollar;  I  have  had  several  cases 


160 

of  that,  separate  clients  who  were  sued  and  who  had  paid  in 
every  dollar;  one  gentleman  we  appeared  for  had  paid  in  $12,000 
in  actual  cash  for  120  shares  of  stock ;  the  officers  of  the  company- 
had  failed  to  issue  a  certificate  declaring  that  the  stock  was  all 
paid  in  in  cash;  my  client  knew  nothing  about  it,  so  the  creditors 
of  the  company  held  him  liable;  no  stockholder  who  is  not  an 
actual  officer  of  the  company  can  know  whether  the  certificate 

is  true  or  not;  that  does  not  prevail  in  any  other  State  that  I 

• 

know  of  in  the  Union. 

Q.  Has  not  the  stockholder  access  to  the  books?  A.  What 
does  that  prove;  what  do  the  books  prove;  the  books  may  contain 
the  lie,  as  in  this  case  they  did;  the  books  had  a  record  of  the 
payment,  but  it  was  not  true;  why  should  a  stockholder  be  com- 
pelled to  hunt  up  the  books  and  trace  the  payment? 

Q.  You   can    not    guard    against    dishonesty  with   any  oth( 
method?    A.  Here  is  a  Legislature  that  puts  a  penalty  on  an 
honest  man;  no  other  State  in  the  Union  does  that  that  I  know  of. 

Q.  You  think  that  is  one  of  the  causes  that  lead  to  the  incor- 
poration in  other  States?  A.  I  am  sure  it  is. 

Q.  Do  you  think  it  is  the  main  cause?    A.  No,  sir;  I  thin 
the  lighter  corporation  tax  is  the  main  cause. 

Q.  They  pay  taxes  here?  A.  That  depends  upon  the  shrewd 
ness  of  their  management;  but  the  tax  would  be  two  per  cenl 
here,  and  two  and  a  half  per  cent  in  Brooklyn;  whereas  it  it 
very  easy  to  settle  over  in  New  Jersey  where  the  tax  is  o 
three-fourths  of  one  per  cent. 

Q.  Now,  if  the  present  laws  regulating  all  corporations  anc 
the  taxing  of  corporations  are  so  oppressive  that  they  have  drive: 
corporations  into  other  States,  what  remedy  or  modiflcatio 
under  the  existing  laws,  do  you  suggest  so  that  they  would  no 
feel  it  necessary  to  go  to  other  States,  beyond,  of  course,  wha 
you  have  already  stated?  A.  Except  the  abolition  of  the 
on  personal  property,  I  think  nothing  more  is  needed,  excep 
some  greater  leniency  as  to  their  organization;  I  think  no  stock 
holder  should  be  liable  to  pay  more  than  the  full  amount  for  hi: 
stock,,  particularly  those  who  pay  in  cash;  I  think  that  a  mai 


161 


who  can  prove  he  has  paid  dollar  for  dollar  in  cash  should  be 
exempted  from  all  further  liability,  no  matter  what  swindle  has 
been  perpetrated. 

By  Mr.  Creamer. 

Q.  How  is  it  that  the  bank  shareholders  can  pay  it;  would  you 
favor  the  abolition  of  the  tax  on  f 73,000,000  of  shares?  A.  I 
think  it  is  wrong. 

Q.  They  pay;  the  Government  must  be  supported?  A.  It 
might  be  supported  by  a  tax  on  real  estate. 

Q.  Do  you  think  that  a  tax  should  be  imposed  on  dwelling 
property  and  the  homes  of  the  poor,  and  that  the  shares  in  banks 
should  be  exempt?  A.  I  think  that  the  tax  on  the  shares  of  the 
banks  eventually  falls  on  the  poor. 

Q.  They  have  no  business  with  any  banks  other  than  savings 
banks;  have  they?  A.  No;  it  is  a  tax  upon  commerce,  and  every 
tax  upon  commerce  is  indirect,  and  every  indirect  tax  falls  upon 
the  poor. 

Q.  What  do  you  call  a  tax  upon  a  tenement?  A.  If  you  mean 
a  tax  upon  the  dwelling,  that  is  an  indirect  tax;  a  tax  on  the  land 
is  not  indirect. 

Q.  A  tax  on  sleep  and  shelter,  and  a  tax  on  sleep  and  shelter 
|  should  be  imposed,  and  a  tax  on  commerce  should  not?  A.  My 
belief  is  that  all  taxes  on  dwelling  houses  ought  to  be  abolished. 

Q.  And  placed  where?  A.  Placed  on  the  land  only,  then  the 
|  landlord  will  pay  it  and  the  tenant  will  not. 

Q.  The  tenant  pays  it  back  to  the  landlord  in  the  rent.  A.  The 
I  landlord  can  never  increase  his  price  for  the  rent  no  matter  how 
much  tax  he  pays;  I  know  that  to  my  sorrow,  because  I  am  a  land- 
lord; if  you  tax  the  rent  of  his  house  he  can  increase  his  rent, 
because  unless  he  does  he  won't  build  any  more  houses,  but  no 
landlord  makes  land  he  makes  houses;  if  you  tax  houses  and  the 
(landlord  can  not  get  that  back  from  the  occupants  he  will  cease. 

Q.  Will  it  not  increase  in  value  year  by  year?    A.  It  does,  as 
[long  as  you  relieve  it  from  taxation. 
21 


162 


Q.  It  would  still  under  that  system  you  propose  increase  in 
value,  would  it  not,  then  he  could  increase  his  rent  in  a  sum  to 
suit  himself;  this  is  your  single  tax  theory;  I  am  not  as  familial' 
with  it  perhaps  as  I  would  like  to  be;  I  would  like  to  be  enlight- 
ened; will  not  the  value  of  land  increase  year  after  year  all  over 
the  State  as  it  has  done  in  New  York  city?  A.  I  hope  so. 

Q.  That  giftves  the  power  to  the  landlord  to  increase  the  rent 

A.  In  increase  in  the  value  of  land  means  nothing  except  an 
increase  in  the  rent  of  the  land;  there  is  no  other  value. 

Q.  Then  the  man  paying  the  rent  is  again  paying  the  tax 
because  he  is  liable  to  pay  more  rent  on  that  increased  val 
A.  An  increase  in  the  value  of  land  has  not  the  result  of  addin 
taxes  to  it;  the  more  you  tax  it  the  less  can  the  landlord  sell  it 
for. 

Q.  Oh,  no.    A.  Excuse  me,  it  always  does. 

Q.  You  can  better  pay  a  high  tax  than  valuable  property 
where  there  is  anything  taxed  in  this  city  except  property  that 
can  be  sold;   often  the  highest  priced  property  here  is  the  least  f] 
taxed,  do  you  know  that?    A.  In  some  particular  cases  that 
be,  but  I  should  not  think  so  generally. 

Q.  It  is  often  the  case;  yours  it  but  a  theory;  I  would  like  i 
the  champions  of  the  single  tax  theory  would  give  us  any  proo 
how  they  get  at  practically  that  they  talk  about  so  much?  A.  Th 
theory  of  the  single  tax  on  gjround  rents  is  very  simple;  every  land|Kl 
lord  charges  for  the  rent  of  his  land  as  he  can  possibly  get;  if 
is  required  to  pay  tax  out  of  that  he  can  not  charge  any 
because  if  he  does  the  tenant  can  find  plenty  of  other  land 
people  won't  charge  any  more;  he  can  not  destroy  his  land 
he  is  taxed,  and  therefore  when  you  tax  land,  there  will  alwa 


be  the  same  amount  of  land;    if  you  tax  houses  there  will 
fewer  houses,  but  if  you  tax  the  land  valuation,  there  will  be  ji 
as  much  land  as  before;  now,  the  landlord  levies  this  rent,  becaui 
the  population  crowds  in,  and  because  government  and  good  go 
ernment  has  come  to  that  neighborhood;  good  government  is  mu*| 
more  the  cause  of  the  raising  rent,  and  consequently  the  value  A 
land,  than  any  other  cause;  it  is  very  much  more  important  thijU 


163 

the  agricultural  value  of  the  land;  wherever  you  find  government 
you  find  the  value  of  land  high;  wherever  you  find  good  govern- 
ment you  will  find  the  value  of  land  very  high;  the  best  kind  of 
government  there  is  in  this  State  is  around  Wall  street,  men  are 
safer  there  than  in  any  other  part  of  the  State. 

Q.  You  mean  their  lives?    A.  I  mean  their  lives  and  property. 

Q.  How  about  the  lambs?  A.  The  opportunity  of  shearing 
them  constitutes  something  of  the  value  of  land  in  Wall  street; 
there  are  opportunities  of  making  wealth  there  on  Wall  street; 
there  are  facilities  for  doing  business,  and  there  is  almost  an 
ideal  government. 

Q.  Good  opportunities  to  lose  wealth  down  there,  is  there  not? 
A.  Yes,  sir;  there  is  under  every  government;  that  is  the  reason 
why  the  land  is  so  high;  the  rent  of  land  around  Wall  street  rep- 
resents the  value  of  the  advantages  which  society  gives  to  chat 
particular  district,  and  the  rent  of  land  is  the  natural  tax  which 
nature  itself  provides  for  making  all  men  pay  for  the  advantages 
they  derive,  and  every  good  thing  that  nature  does  provide;  you 
will  find  everywhere  that  the  annual  rent  of  land  alone  without  the 
houses  is  sufficient  to  cover  the  expenses  of  all  kinds  of  govern- 
ment, national,  State  and  city  and  everything  else;  now,  our 
theory  is  that  this  being  the  natural  tax,  by  which  men  are  com- 
pelled to  pay  what  they  ought  to  pay,  the  men  who  collect  the 
rents  are  nature's  tax  gatherers,  and  it  is  the  duty  of  the  State 
to  go  and  say:  "  You  have  collected  much  more  than  you  require; 
we  want  out  of  it  enough  to  pay  for  the  cost  of  government; "  the 
landlords,  that  is,  the  owners  of  the  land,  receive  compensation 
from  the  people  that  live  on  the  land  sufficient  to  cover,  and  much 
more  than  cover  all  the  expenses  of  all  kinds  of  government;  that 
is  the  reason  why1!  think  taxation  of  personal  property  is  unjust; 
when  you  have  the  landlords,  and  you  protect  them  as  you  ought 
to  in  collecting  the  taxes  from  the  whole  people,  far  more  than 
necessary  for  the  government,  I  say  it  is  unjust  to  turn  upon  any 
man,  the  holder  of  personal  property,  or  holder  of  anything,  and 
say:  "Pay  taxes  to  us  over  again;"  they  have  paid  their  taxes 
once;  they  have  paid  enough  to  support  the  general  government, 


164 


State  and  city  governments,  and  I  hold  that  all  double  taxation 
is  unjust;  may  I  be  permitted  to  say  a  little  as  to  how  it  would 
bear  on  general  classes;  I  know  the  farmers  are  very  much  preju 
diced  against  this,  because  they  think  they  are  to  be  taxed  so 
many  pennies  on  each  square  acre  of  land;  the  idea  is  that  the 
ground  rent  shall  be  ascertained,  and  the  tax  apportioned  to 
the  ground  rent  in  this  State  in  order  to  get  the  revenues  of  ths 
State  and  city,  you  would  have  to  take  twenty-five  to  thirty  per 
cent  of  ground  rent. 

Q.  Is  not  that  the  idea  of  the  State  owning  the  land?    A. 
sir;  we  are  entirely  opposed  to  the  State  owning  land. 

Q.  That  is  socialism?    A.  Yes,  sir;  and  I  do  not  believe  In  tha 

Q.  When  you  say  our  theory,  to  whom  do  you  refer?  A.  I 
mean  the  multitude  of  gentlemen  with  whom  I  have  the  honor  of 
acting;  single  tax  men,  and  among  them  are  men  very  prominent 
in  public  life,  and  presidents  of  great  institutions  in  these  cities, 
and  I  violate  no  confidence  by  saying  that  General  Christian  of 
Brooklyn  is  in  thorough  accord  with  me  in  those  views;  we  include 
among  our  number  men  who  own  land,  and  men  who  own  person:  il 
property  of  all  kinds;  I  am  glad  to  say  also  that  we  include  in  our 
number  a  very  large  number  of  the  poor  people  of  this  country; 
that  is  the  people  I  am  interested  in;  in  my  judgment  we  can  get  a 
majority  of  the  people  of  New  York  and  Brooklyn  to  indorse  ou 
views  to-day. 

Q.  A  majority  of  the  committee  desire  to  adjourn  at  5  o'clock, 
if  you  have  a  statement,  would  you  give  it  to  us  to  put  on  record? 
A.  I  want  to  say  as  to  the  farmers  that  this  form  of  taxation 
would  fall  upon  the  farmers  in  this  State  at  the  rate  of  about  one 
dollar  per  acre  per  annum;  for  the  prosperous  farmer  that  would 
represent  all  his  taxes;  that  is  a  great  deal*too  much  for  the], 
farmer,  because  he  would  not  have  anything  like  that;  a  farmer 
could  afford  to  own  land  within  the  limits  of  a  city,  and  would 
not  have  to  pay  that;  in  the  country  it  would  represent  a  tax  oi 
about  thirty  cents  an  acre  for  all  his  taxes;  that  would  cover 
everthing,  his  school  taxes  and  everything  else;  in  the  city,  the 
tax  on  a  business  place,  such  as  that  where  I  carry  on  my  busi 


165 

ness,  would  be  at  the  rate  of,  instead  of  thirty  cents  an  acre, 
about  $3,000  an  acre;  that  is  the  difference  of  the  bearing  of  this 
tax  upon  the  farmer  and  property  in  the  cities;  of  course,  in  the 
outskirts,  those  taxes  would  be  perhaps  only  $100  an  acre;  nearer 
the  center  it  might  be  $500  an  acre;  I  do  not  think  there  is  a 
farmer  in  the  most  prosperous  part  of  the  State  who  would  be 
called  upon  to  pay  more  than  one  dollar  an  acre  for  the  best  farm 
in  the  State. 

By  Mr.  Gifford: 

Q.  Are  you  aware  that  if  he  was  called  upon  to  pay  that  it 
would  be  double  his  present  taxes?    A.  Not  a  very  prosperous  one; 
JI  mean  land  that  is  worth  $100  an  acre;  it  must  be  remembered 
...,uu.    the  farmers'  house  would  be  taken  out  of  the  valuation; 
all  his  improvements,  his  fences,  his  grass,  his  crops;  everything 
f  that  kind  would  be  exempt;  now,  the  taxes  would  be  in  the 
anterior  of  this  State  from  one-half  to  three-fourths  of  one  per  cent; 
n  the  cities  it  would  be  about  two  to  two  and  one-half  per  cent; 


i/ou  can  estimate  what  it  would  be  without  crops,  fences  and  every- 


v 

ing  of  that  sort. 

Q.  What  value  would  land  have  without  any  improvements 
m  it?    A.  The  value  of  the  land  on  the  corner  of  Pine  and 
rilliam  street,  if  you  would  tear  down  the  building,  which  repre- 
mts  only  one-eighth  part  of  an  acre,  would  be  $250,000. 
Q.  Is  'it  not  the  buildings  upon  land  that  have  made  the  value 
this  city,  or  is  it  simply  land?    A.  No;  it  is  the  people  that 
jome  to  the  land;  if  you  swept  the  whole  of  this  city  with  fire,  as 
uick  as  the  land  got  cold  we  should  begin  to  build  again,  and  the 
fand  would  be  worth  just  as  much,  rather  more,  because  there 
rould  be  an  opportunity  to  put  better  buildings  on  it;  after  the 
Lty  of  Chicago  was  burned  down  the  value  of  the 'land  was 
greater  after  the  fire  than  it  was  before;  that  was  notably  the 

after  the  great  fire  of  London  200  years  ago. 
Q.  Are  you  not  willing  to  admit  that  any  good  farm  with  splendid 
mildings  would  be  worth  less  if  all  those  buildings  should  be 
lestroyed?    A.   Certainly. 


166 

Q.  There  is  a  value  in  the  buildings?    A.  Yes,  sir;  and  there  is 
a  value  in  the  New  York  buildings ;  we  are  talking  of  the  value  of 
the  ground  underneath;  I  will  submit  my  views  in  regard  to  this 
whole  matter  as  follows:  The  invitation  to  appear  and  testify 
before  this  committee,  which  has  been  extended  to  me,  I  under- 
stand to  be  given  to  me,  not  especially  as  an  individual,  but  as  a 
representative  of  that  very  large  and  increasing  class  of  citizens 
who  favor  the  abolition  of  all  taxes  upon  personal  property  andj 
upon  improvements  on  land,  and  the  collection  of  taxes  exclu- 
sively from  ground  rents;  but  I  also  understand  that,  as  this  com-| 
mittee  is  appointed  for  the  purpose  of  framing  and  submittm* 
to  the  Legislature  practical  propositions  for  Immediate  actionl 
you  desire  to  receive  information  as  to  our  views  concerning 
questions  which  are  to-day  within  the  range  of  practical  politics;] 
we  freely  admit  that  our  opinions  do  not  yet  command  to  then 
full  extent  the  conscious  assent  of  a  majority  of  voters  in  anyl 
county  in  the  State;  although  we  know  that  they  are  held  byj 
a  very  large  and  constantly  increasing  minority,  but  upon  on< 
article  of  our  fiscal  creed,  namely  the  abolition  of  all  taxation! 
upon  personal  property,  we  believe  that  a  large  majority  of  all 
the  people  in  New  York  and  Brooklyn,  who  have  any  opinion| 
upon  the  subject,  agree  with  us,  we  are  well  convinced  that,  if 
popular  vote  could  be  taken  upon  that  issue,  the  abolition  of  taxa-l 
tion  upon  personal  property  would  command  the  support  of  a  large! 
majority  of  all  the  electors  in  each  city,  a  large  majority  of  all 
the  taxpayers,  a  decided  majority  even  of  the  owners  of  real 
estate,  and  an  overwhelming  majority  of  all  intelligent  citizens 
who  have  given  any  serious  consideration  to  the  subject;  now,  ad 
a  matter  of  immediate  practical  politics,  we  are  not  even  asking 
that  the  Legislature  shall  abolish  the  taxation  of  personal  prop 
erty  throughout  the  State;  our  demand  is  limited  to  the  simplt 
proposition    that     each     county    and    possibly     each     city    ii 
the  State,  should  be  left  free  to  decide  for  itself  whether  per 
sonal  property  shall  be  taxed  or  not,  while  we    are  preparecj 
to  assent  to  any  arrangement  of  taxes  by  which  the  taxpayers  oi 
counties  who  choose  to  assess  personal  property  shall  be  assured 


167 

that  counties  which  do  not  assess  it,  shall  continue  to  bear  the 
same  share  of  State  taxation  which  they  would  bear  if  they  did. 
We  are  not  asking  that  taxpayers  in  cities  shall  be  relieved  as 
a  whole  from  any  share  of  tax  burdens  which  the  State  for  its 

p.  own  purposes  of  revenue,  has  put  upon  them  in  the  past,  or  may 

a  choose  to  put  upon  them  in  the  future.  Our  only  request  is  that 
each  locality  should  be  allowed  to  decide  for  itself  how  its  quota 

d  of  taxation  should  be  raised. 

But,  before  taken  up  this  question,  it  seems  absolutely  neces- 
sary  to  state  some  of  the  reasons  why  the  people  who  live  in  the 
large  cities  are  opposed  to  taxation  of  personal  property,  and 

\i  why  the  owners  of  real  estate  in  those  cities  have  concluded  that 

i»|it  is  better  for  them  to  pay  all  the  taxes  assessed  upon  those 
cities,  rather  than  to  attempt  to  collect  any  part  of  them  from 

ir I  personal  property  as  such. 

In  order  to  talk  to  each  other  to  any  purpose,  we  must  first 

jy  agree  upon  the  meaning  of  the  things  which  we  are  talking  about. 

ie|What  do  we  mean  by  personal  property?  How  do  we  propose 
to  discover  it?  What  success  have  we  had  in  discovering  it  in 
the  past,  and  what  success  can  be  hoped  for  in  the  future? 

Personal  property  may  be  divided  into  two  classes,  chattels 
and  credits.  Under  the  name  of  "credits"  are  to  be  included, 
not  only  book  accounts,  bills,  notes,  bonds,  mortgages,  bank 
deposits  and  the  like,  but  also  shares  of  corporate  stock  and 

ill)  probably  shares  in  any  partnership.  Our  chattels,  properly 
speaking,  are  only  those  things  which  we  have  in  our  own  imme- 
diate custody,  or  on  special  deposit,  in  the  custody  of  our  agents, 
who  have  no  right  to  use  them,  even  for  a  moment,  for  their  own 
purposes. 

It  is  universally  admitted  that,  in  all  civilized  countries, 
"credits"  form  by  far  the  larger  portion  of  personal  property. 
It  is  easy  to  see  why  this  is  so.  Credit  may  be  given  for  more 
than  two-thirds  of  the  value  of  both  chattels  and  real  estate; 
and  it  is  continuously  given  to  the  extent  of  at  least  half  the 
value  of  both.  There  are  many  who  believe  that  the  wealth  of 
the  community  is  actually  increased  by  credits,  to  their  full 


JOS 

amount.  This  is  a  doctrine  dear  to  the  farmer's  heart,  as  justify- 
ing all  his  favorite  theories  of  taxation.  It  is  easily  tested.  Let 
the  owner  of  $2,000,000  worth  of  land  mortgage  it  for  half  itn 
market  value.  That  will  add  $1,000,000  to  the  national  wealth. 
As  loans  might  safely  be  made  upon  this  mortgage  to  the  full 
face  value,  let  the  first  lender  pledge  it  as  security  for  another 
loan  of  a  million,  the  second  lender  pledges  it  for  another 
1,000,000,  and  so  on,  until  promissory  notes  are  outstanding  to  the 
amount  of  $100,000,000;  all  secured  by  the  original  mortgage 
for  $1,000,000.  All  this  is  an  actual  increase  of  national  wealth 
on  this  theory;  for  every  note  is  perfectly  good.  It  would  only 
require  a  hundred  loans  to  increase  our  wealth  fifty  times  over. 
The  philospher's  stone  and  Fortunatus'  purse  are  completely 
outdone. 

But  what  says  plain  common  sense?  Debt  can  not  increase  the 
general  stock  of  wealth.  A  loan  secured  by  the  pledge  of  a  chat- 
tel, divides  the  real  title  to  that  chattel  between  the  borrower 
and  the  lender,  giving  to  the  lender  the  meat  and  leaving  to  the 
borrower  whatever  may  cling  to  the  bone.  The  mortgage  of 
land,  under  the  common  law,  transferred  the  actual  ownership  of 
the  land  to  the  mortgagee;  and  although  this  rule  has  been  nomi- 
nally abolished,  the  bottom  fact  is  that  a  mortgagee  still  has  the 
better  half  of  the  ownership.  He  is  the  real  owner  of  the  land, 
to  the  extent  of  his  loan;  although  he  can  only  enforce  his  owner- 
ship through  a  sale  of  the  land.  Or,  to  put  it  in  another  form, 
the  title  is  divided  between  the  mortgagor  and  the  mortgagee; 
the  latter  having  the  cream  and  the  former  the  skim  milk. 

The  same  thing  is  true  concerning  every  form  of  debt.  Promis- 
sory notes,  book  accounts  and  debts  of  every  kind,  are  of  no  value 
whatever,  except  so  far  as  they  constitute  a  good  and  readily 
enforceable  claim  against  visible,  tangible  things,  in  the  hands  of 
the  debtors.  And  to  this  extent,  property  in  the  hands  of  debtors 
really  belong  to  their  creditors,  although  the  latter  have  no  right 
to  seize  anything,  until  the  debt  is  due.  If  the  debt  stands 
against  no  tangible  things,  it  is  worthless.  If  it  does  stand 
against  such  things,  it  diminishes  the  general  wealth  as  much  by 


169 

its  lien  on  those  things,  as  is  adds  by  its  own  face  value,  and 
therefore  it  still  adds  nothing  to  the  general  wealth. 

Considered  from  the  tax  collector's  point  of  view,  it  may  be 
conceded  that,  as  he  has  a  fixed  amount  to  collect,  the  total  burden 
of  taxation  will  not  be  increased  by  counting  wealth  twice  over. 
It  may  therefor  be  further  conceded  that,  if  all  forms  of  credits 
could  be  effectually  reached,  and  taxed,  the  tax  would  simply  be 
divided  among  those  who  divide  the  ownership  of  things,  and  so 
no  injustice  would  be  done.  Assuming,  for  the  moment,  that  any 
form  of  personal  property  ought  to  be  taxed,  it  may  also  be 
assumed  that  the  double  taxation  involved  in  the  taxing  credits 
would  do  no  harm,  if  they  could  all  be  reached. 

On  the  other  hand,  what  advantage  is  there  in  doing  this,  if 
it  can  be  done?  Why  take  the  trouble  to  collect  taxes  from  two, 
three  or  four  persons,  on  account  of  one  piece  of  property?  It 
increases  the  cost  of  collection,  without  the  slightest  benefit  to 
the  State;  and  it  confers  no  benefit  upon  the  taxpayers.  "The 
borrower  is  servant  to  the  lender."  He  must  eventually  repay 
whatever  tax  the  lender  is  compelled  to  pay  upon  the  loan,  if  the 
tax  is  impartially  laid  and  fully  collected. 

But  is  it  possible  to  collect  taxes  upon  credits,  impartially  and 
fully,  or  even  to  approximate  to  such  a  result?  It  would  at  first 
seem  possible  to  ascertain  the  amount  and  value  of  the  stock  and 
bonds  of  domestic  corporations,  especially  of  railway  companies; 
because  they  can  be  compelled  to  make  full  disclosure  of  their 
aff aii-s;  they  must  keep  regular  and  full  books  of  account;  and 
their  officers  have  not  usually  such  an  overwhelming  interest  in 
their  finances  as  to  make  them  willing  to  run  great  risks 

eivly  for  the  sake  of  evading  corporate  taxation.  This  is  far  too 
iberal  a  concession;  because  immense  blocks  of  shares  are  now 
Of|owned  by  individuals,  who  either  personally  manage  the  corpora- 
)rg|tions  in  which  they  are  interested  or  would  make  it  a  condition 
f  the  appointment  of  managers  that  they  should  commit  whatever 
ount  of  perjury  could  prudently  be  used  for  the  purpose  of 

•ading  taxes.  It  is  idle  to  say  that  managers  of  such  easy  con- 
-Jences  will  not  be  trusted  with  the  administration  of  great 
22 


170 


affairs.  It  is  notorious  that  bribery,  upon  the  most  extended 
scale,  is  habitually  practiced  by  managers  of  corporations,  con- 
ducted otherwise  with  more  than  average  integrity;  and  we  are 
all  familiar  with  the  story,  undoubtedly  true  in  substance,  of  the 
railway  president,  who  told  all  the  other  members  of  a  presiden 
conference  that  he  would  take  the  word  of  any  of  them,  as  a  gentle 
man,  for  a  million  dollars,  but,  as  a  railway  officer,  not  for 
cent. 

.  Assuming,  however,  that  the  direct  taxation  of  corporations 
could  be  successfully  enforced,  this  could  only  be  done  in  those 
States  in  which  their  business  is  and  must  be  carried  on.  The 
stock  and  bonds  of  a  New  Jersey  corporation  are  often  owned 
entirely  in  New  York;  but  in  nearly  all  cases  they  can  only  be 
taxed  in  New  Jersey.  If  the  corporate  property  is  situated  in  New 
Jersey,  the  same  result  would  be  secured  by  taxing  the  property 
itself.  If  that  is  done,  the  stock  and  bonds  should  be  exempted, 
or  else,  if  they  are  taxed,  the  visible  chattels  and  real  estate  of 
the  corporation  should  be  exempted.  Is  not  the  natural  and 
sensible  method  to  tax  the  things  and  exempt  the  stock? 

The  federal  constitution  stands  in  the  way  of  taxing  corporate 
bonds,  by  confining  local  taxation  to  bonds  held  by  citizens  of  the 
taxing  State.    If  such  taxation  became  heavy,  it  would  soon  be 
found  that  all  bonds  of  New  York  corporations  were  held  outsid 
of  the  State  of  New  York. 

Turning  now  to  the  case  of  individuals,  it  is  certain  that  a  ve 
large  majority  keep  no  detailed  accounts  of  their  property  o 
income,  and  that  a  majority  of  those  who  do  would  cease  to  do 
so,  if  by  that  means  only  they  could  avoid  excessive  taxation. 

The  owners  of  credits  everywhere  use  their  utmost  efforts 
conceal  them  from  the  assessor.  Where  the  law  requires  swo 
returns,  creditors  very  often  make  no  returns,  submitting  to  a] 
arbitrary  law  which  may  be  imposed  upon  them.  In  the  vas 
majority  of  cases,  the  returns  are  false.  Some,  knowing  that  th< 
assessor  would  not  believe  them,  if  they  denied  the  possessior 
of  any  credits,  admit  a  part  of  their  holdings;  others  deny  then 
altogether. 


171 

If  is  true  that  large  amounts  of  credits  are  reached  by  taxa- 
tion in  many  States;  but  the  assessment  is  generally  made  by 
guesswork;  and  it  is  nowhere  made  with  any  fairness  or  equality. 

By  far  the  larger  part  of  all  credits  everywhere  escape  from 
taxation;  strictly  honest  holders  pay  outrageously  disproportion- 
ate share  of  the  taxes;  the  timidly  dishonest  or  highly  ingenious 
pay  a  small  share;  and  the  utterly  unscrupulous  practically  none 
at  all. 

Taxation  of  Visible  Chattels. 

Some  writers  on  the  subject,  who  fully  admit  that  invisible 
personal  property  ought  not  to  be  taxed,  nevertheless  insist  that 
everything  should  be  taxed,  which  can  be  seen  and  touched.  They 
see  clearly  that  mortgages  represent  real  estate,  that  promissory 
notes  and  book  debts  represent  the  dry  goods,  groceries,  metals 
or  the  like,  for  which  they  are  given,  that  the  stock  of  a  railway 
company  represents  the  railway  and  its  equipment,  and  that 
there  is  no  sense  or  justice  in  taxing  both  the  things  which  are 
represented  and  the  pieces  of  paper  which  represent  them.  They 
see,  too,  that  bonds  and  notes  can  be  hidden,  and  that  any 
attempts  to  tax  them  must  result  in  doubling  the  burden  of 
simplicity  and  honesty  and  exempting  shrewdness  and  roguery. 
But  they  insist  that  personal  property,  which  can  be  seen  and 
handled,  ought  to  bear  its  share  of  taxation  and  can  be  reached 
effectually  and  equally. 

Let  us  first  consider  what  articles  of  personal  property  can  be 
seen  and  touched,  so  as  to  be  reached  by  faithful  assessors.  The 
results  of  actual  assessments,  in  States  which  adopt  stringent 
methods  of  personal  taxation,  show  that  these  "visible  things" 
are  principally  animals,  stock  on  hand  of  merchants  and  manu- 
facturers, household  furniture,  farm  implements  and  carriages, 
in  the  order  named.  As  the  only  reason  for  taxing  these  things, 
while  letting  invisible  property  pass,  is  that  the  assessment  of 
invisible  property  must  depend  upon  the  oath  of  the  taxpayer, 
we  must  inquire  how  far  those  visible  articles  can  be  fairly 


172 


reached  and  valued  by  assessors,  without  depending  upon  the 
statements  of  their  owners. 

Judged  by  this  standard,  it  is  manifest  that  the  property 
farmers  would  be  more  easily  reached  and  more  accurately  value 
by  honest  assessors  than  the  property  of  any  other  class.  F; 
animals  and  implements  are  always  readily  open  to  inspectio: 
Their  value  is  generally  nearly  uniform.  Most  farmers  pay  about 
the  same  prices  for  their  horses,  cattle,  plows,  tools  and  furniture. 
A  few  own  highly  expensive  cattle;  and  these  will  escape  full 
assessment,  just  as  the  very  rich  will,  in  any  line  of  business. 
But  the  mass  of  farmers  own  things  which  their  neighbors  ci«u 
value  easily.  Very  different  is  the  case  of  merchants.  What 
assessor,  however  honest  and  competent,  can  personally  value  all 
the  stock  of  even  one  grocery  store,  not  to  say  the  stock  of  all 
stores  in  his  district?  Fancy  an  assessor,  making  a  persona) 
appraisal  of  the  stock  of  fifty  drug  stores,  a  hundred  dry  goods 
stores  and  as  many  groceries.  In  one  store,  there  are  hundreds 
of  different  articles,  at  different  prices,  by  the  yard  or  the  pound 
or  the  gallon.  Bales  of  goods  lie  side  by  side;  some  worth  four 
cents  a  yard,  some  ten  cents,  some  two  dollars.  The  differ- 
ence between  goods  worth  one  dollar  a  yard  or  two  dollars  is 
often  imperceptible  to  the  eye  of  any  one  but  an  expert  But 
how  can  an  assessor  have  time  even  to  open  all  these  bales  to 
look  at  them,  much  less  judge  accurately  of  their  value?  AH  the 
assessors  of  New  York  city  could  not  approximately  value  Clailin's 
stock  alone,  without  relying  upon  the  word  of  Claflin's  clerks. 
Therefore  the  stock  of  merchants  and  manufacturers  would  be 
assessed  upon  the  valuation  given  by  themselves,  as  in  tact  it  is 
now.  Thus  the  assessment  of  "  visible  and  tangible  property  "  ID 
these  important  cases  is  made  and  must  be  made  in  exactly  the 
same  manner  as  the  assessment  of  bonds,  notes  and  other  invis- 
ible property,  resulting  in  a  double  or  treble  burden  upon  the 
simple  and  truthful,  as  compared  with  their  unscrupulous 
neighbors. 

The  same  thing  is  true  as  to  household  furniture.    Farmers 


173 

have  a  certain  average  quality  of  furniture,  the  value  of  which  can 
be  ascertained  far  more  nearly  than  the  value  of  that  of  well-to-do 
city  residents.  In  proportion  to  the  wealth  of  the  taxpayer  would 
be  the  failure  of  the  most  honest  assessor  to  estimate  the  true 
value  of  his  property.  Anybody  can  estimate  the  value  of  a  two 
dollar  chair,  but  few  indeed  can  tell  the  difference  between  a 
chair  costing  fifty  dollars  and  another  costing  150.  To  many 
assessors  there  would  be  no  apparent  difference  in  value;  to  none 
would  the  fair  difference  seem  to  be  more  than  twenty  dollars  or 
thereabouts.  In  many  household  articles,  such  as  bedding,  for 
example,  a  difference  of  200  per  cent  in  cost  is  attended  with  no 
outside  indications.  Many  honest  assessors  would  reckon  the 
value  of  a  f  15,000  set  of  furniture  as  no  greater  than  that  of  a  set 
costing  less  than  half  the  price. 

Testimony  of  Experience. 

These  theories  have  been  fully  proved  by  actual  experience. 
European  governments,  for  several  centuries,  persisted  hi  the 
efforts  to  appraise  and  tax  all  classes  of  property,  real  and  per- 
sonal, upon  an  equal  footing.  The  ancient  tax-rolls  of  England 
enumerate  the  precise  number  and  value  of  beds,  tables,  chairs, 
pots  and  pans  of  each  taxpayer.  The  English  tax,  now  called  the 
land-tax  imposed  in  the  seventeenth  century,  was  in  terms  a  tax 
upon  all  real  and  personal  property  just  like  that  of  New  York. 
As  late  as  1827  a  trifling  amount  of  personal  property  was 
assessed  and  taxed  under  this  law.  The  only  reason  why  such 
property  dropped  out  of  the  assessment -rolls  was  that  it  became 
increasingly  impossible  to  reach  it.  Practically  it  dropped  out  at 
a  veiy  early  day.  A  similar  experience  in  all  Europe  led  to  similar 
results,  and  the  attempt  to  assess  personal  property,  whether 
visible  or  invisible,  otherwise  than  by  means  of  an  income  tax, 
has  been  universally  abandoned. 

But  the  citizens  of  our  own  favored  land,  confident  in  tlie 
power  of  the  American  eagle  and  of  Kepublican  institutions, 
despise  the  teachings  of  European  experience,  and  resolutely  per- 


174 

sist  in  the  taxation  of  personal  property.  They  have  achieved  a 
certain  measure  of  success.  The  official  assessors  estimate 
that  they  have  reached  nearly  sixty  per  cent  of  such  property  in 
New  England,  fifty  per  cent  in  some  western  States  and  fifteen 
per  cent  in  New  York.  If,  by  "personal  property"  only  visible 
chattels  were  intended,  this  estimate  might  be  correct.  But,  as 
this  is  not  intended,  the  estimate  is  excessive.  In  no  large  State1 
does  the  assessed  value  of  personal  property  materially  exceed  half 
the  assessed  value  of  real  estate  or  amount  to  one-third  of  its 
actual  value.  In  some  States,  Alabama  for  example,  the  roll 
of  personalty  is  swelled,  by  including  in  all  its  railway  values. 
But  it  is  everywhere  conceded  that  personalty,  if  defined  as 
including  all  forms  of  liens  and  loans,  fully  equals  realty  in 
value.  It  would  be  strange  if  it  did  not;  because  such  a  definition 
includes  all  chattels,  all  debts  incurred  in  the  purchase  of  chattel?! 
and  all  debts  which  are  made  a  charge  upon  land.  This  is  the 
value  which  our  legislators  strive  to  tax  and  it  would  be  too  liberal 
to  allow  that  they  reach  one-third  of  it  anywhere. 

Long  study  of  all  accessible  statistics  has  convinced  the  writer 
that  the  real  value  of  the  bare  land  is  almost  exactly  equal  to 
the  value  of  all  improvements  upon  it,  attached  to  the  ground, 
and  that  the  value  of  actual,  visible  chattels  is  about  the  same. 
In  other  words,  the  wealth  of  the  country  is  divided  into  three 
nearly  equal  parts,  land  improvements  and  chattels.  This 
appears  to  be  the  fact  in  every  civilized  country;  and  the  reason, 
in  part,  may  be  readily  discerned.  The  value  of  land  consists 
of  nothing  whatever,  except  a  power  of  exacting  tribute  from 
those  who  labor  on  land.  The  fruits  of  labor,  in  which  alone  this 
tribute  can  be  paid,  consist  solely  of  improvements  and  chattels. 
It  is  impossible  that  the  value  of  land  should  exceed  the  other 
values  combined;  because  that  would  mean  that  the  landlords  gctj 
more  than  there  is  to  get.  In  the  struggle  between  the  landlords,  j 
the  capitalist  and  the  laborer,  we  might  reasonably  anticipate 
that  the  landlord  would  not  get  more  than  one  third  the  whole  net] 
produce;  and  this  appears  to  be  the  actual  average.  The  reason! 
for  an  equal  investment  in  land  improvements  and  in  chattels] 


175 

is  not  so  easy  to  see;  but  the  fact  is  verified  by  all  accurate 
valuations. 

But  nowhere  are  actual  chattels  found  by  assessors,  to  anything 
like  the  value  of  the  land.  Taking  only  places  in  which  there 
are  assessment  laws  rigidly  enforced,  Boston  discovers  visible 
chattels  to  the  amount  of  only  two  and  one-half  per  cent  of  its 
real  estate,  Ohio  to  only  fifteen  per  cent,  Minnesota  to  only  twenty 
per  cent;  whereas,  in  each  case,  the  proportion  should  be  fifty 
per  cent.  Here,  as  in  every  other  instance,  it  is  noticeable  that 
the  proportion  of  chattels  discovered  by  the  assessor  is  greater 
and  greater,  as  the  proportion  of  farmers  to  the  entire  population 
increases. 

The  utter  failure  of  the  American  system  of  taxing  personal 
property  was  conclusively  shown  by  our  illustrious  friend,  David 
A.  Wells,  in  his  New  York  Report  of  1871.  The  writer  has  taken 
up  the  thread,  since  that  time,  in  various  papers,  especially  in  an 
address  before  a  legislative  committees  in  Ohio,  .in  1889.  It  was 
there  shown,  from  official  figures,  that  the  rigid  tax  laws  of  Ohio 
and  California  ridiculously  failed  to  reach  personal  property, 
except  in  the  rural  districts.  The  sworn  returns  of  taxpayers 
showed  that,  in  five  years,  Ohio  had  lost  4,000  watches,  30,000 
carriages  and  f  11,000,000  in  cash;  the  inroads  of  poverty  were  most 
marked  in  Cincinnati,  which  lost  one-fourteenth  of  its  watches, 
nearly  one-third  of  its  carriages,  one-fourth  of  its  cash  and  one- 
eighth  of  its  credits. 

In  like  manner,  the  adoption  and  stringent  tax  laws  in  Cali- 
fornia, resulted,  after  six  years,  in  apparent  loss  in  San  Francisco, 
of  two-thirds  of  all  its  cash  and  one-third  of  all  other  personal 
property.  Nine-tenths  of  California,  while  abounding  in  cows, 
did  not  possess  a  pound  of  butter;  fifty  counties  had  crowds  of  bee- 
hives, but  only  four  had  any  honey;  and  four-fifths  of  that  State  so 
falsely  reported  by  the  census  as  a  great  wool-growing  region,  did 
not  produce  a  pound  of  wool. 

Experience  of  Boston. 

According  to  unanimous  testimony,  the  city  of  Boston  is  so 
fortunate  as  to  possess  a  board  of  assessors,  in  whose  honesty  and 
ability  every  one  has  confidence.  Those  assessors  are  armed  by 


176 

law  with  almost  despotic  powers  of  search  and  with  absolutely 
despotic  powers  of  valuation.  They  can  ransack  every  man's 
books,  and  they  can  disregard  all  the  evidence  when  they  have 
finished.  After  exhausting  all  their  powers  of  inquiry,  chey  are 
allowed  to  meet  in  secret,  to  go  through  a  progress  of  arbitrary 
assessment,  fitly  known  by  the  name  of  "dooming."  All  these 
powers  are  fully  exercised.  Their  last  return  of  details,  being  ior 
the  year  1889,  shows  that  the  whole  amount  of  taxable  personal 
property  which  they  were  actually  able  to  discover  was  $39,000,000, 
exclusive  of  bank  stock.  Being  dissatisfied  with  this  estimate, 
which  was  all  that  was  justified  by  any  facts  which  they  can  state, 
they  proceeded  to  multiply  it  four  and  a  half  times  by  a  nitre 
guess.  In  their  dooming  chamber  they  guessed  that  personal 
property,  other  than  bank  stock,  ought  to  be  valued  at  $186,000,000' 
and  the  citizens  of  Boston  were  compelled  to  pay  taxes  upon  thai 
amount.  Could  anything  be  more  monstrous  or  more  absurd  than 
a  system  of  taxation  which,  even  when  administered  by  phe- 
nomenally honest  and  competent  men,  produce  such  results? 

The  items  of  which  the  $39,000,000  actually  discovered  consist 
are  in  the  following  proportions,  in  round  numbers:  Visible  to 
assessors,  $14,570,000  or  thirty-seven  and  one-half  per  cent;  invis- 
ible to  them,  $24,650,000,  or  sixty-two  and  one-half  per  cent. 

Almost  the  whole  of  the  things  visible  to  Boston  assessors 
consisted  of  merchandise  and  machinery.  Taxes  upon  these,  of 
course,  if  equally  distributed,  simply  increased  the  cost  of  goods 
to  consumers,  just  as  excise  duties  on  whisky  increase  the  cost* 
of  whisky  to  drinkers.  But,  it  is  manifest  from  the  arbitrary 
increase  made  by  the  assessors,  these  taxes  were  not  equally 
distributed;  and,  therefore,  one  large  section  of  taxpayers  was 
robbed  for  the  benefit  of  the  other  section.  For  unequal  taxa- 
tion upon  producers  makes  it  impossible  for  those  who  are  taxed 
beyond  their  just  share  to  recover  such  excess  from  their  cus- 
tomers, while  those  who  are  taxed  below  their  share  recover  all 
which  they  would  have  paid  under  strictly  equal  taxation.  It  fol- 
lows that  those  who  are  taxed  most  are  simply  plundered,  undor 
forms  of  law,  for  the  profit  of  their  competitors  who  are  tax^d 


177 

least.  If  Havemeyer  and  Spreckels  were  the  only  refiners  of 
sugar,  and  both  were  taxed  equally  upon  their  production,  both 
would  recover  the  tax  from  their  customers;  but  if  Havemeyor 
should  be  taxed  while  Spreckels  went  free,  Spreckels  could  under- 
sell Havemeyer,  who  would  be  practically  robbed  for  Sprockets' 
benefit.  Now  this  result,  in  a  greater  or  less  degree,  invariably 
follows  every  attempt  to  tax  personal  property. 

Passing  to  the  invisible  property  assessed  in  Boston,  we  lind 
that  |4,000,000  consisted  of  cash,  $7,700,000  of  stock  in  foreign 
corporations  and  $12,000,000  of  debts,  of  which  two-thirds  were 
secured  by  mortgage  on  real  estate.  Thus  more  than  one -half 
of  all  the  personal  property  returned  for  taxation  consiste-1  of 
mere  paper  titles  to  or  liens  upon  other  things,  which  were  taxed 
somewhere  else.  If  this  is  not  double  taxation,  what  is? 

See  how  the  system  works.  Smith  forms  a  little  corporation 
to  own  a  railroad  in  Vermont.  The  railroad  is  fully  taxed  there. 
But  Smith  lives  in  Boston;  and,  as  he  owns  all  the  stock,  say 
f  100,000,  and  stock  in  a  foreign  corporation  is  assessed  there, 
he  is  taxed  on  the  whole  amount  a  second  time.  He  mortgages 
the  road  for  $100,000,  and  spends  the  proceeds  on  improvements. 
This  additional  value  is  taxed  in  Vermont.  But  he  sells  the  mort- 
gage bonds  to  Brown  of  Boston,  who  is  then  taxed  again  upon  the 
whole  $100,000  there.  Brown  pledges  the  bonds  to  Jon-^s  as 
security  for  a  loan  of  $100,000,  and  forthwith  Jones  is  taxed  upon 
the  whole  amount.  This  makes  three  taxes  upon  only  one  piece 
of  real  property.  This  is  the  way  in  which  the  wise  men  o"f 
Massachusetts  mean  that  their  laws  shall  work;  but,  as  the  tax- 
payers revolt  against  such  injustice,  and  protect  themselves  in 
the  only  way  open  to  them,  to  wit,  by  hard  swearing,  Massa- 
chusetts counteracts  that  evil  by  increasing  everybody's  taxes 
fourfold,  on  the  assumption  that  all  have  made  false  returns 
alike.  At  all  events,  this  is  how  they  do  it  in  Boston. 

Summary  of  Practical  Objections. 

All  that  we  have  said  will  be  doubtless  dismissed   by  some 
members  of  the  Legislature  with  the  remark  that  we  are  mere 
23 


178 


theorists  and  not  practical  men.  The  truth  is  precisely  the  oppo 
sife.  It  is  the  advocates  of  the  personal  property  tax  who  are 
theorists,  and  we  who  oppose  it,  are  the  practical  men.  Not  only 
do  we  include  among  our  number  a  multitude  of  persons  whc 
own  more  real  estate  than  they  do  personal  property,  and 
far  more  taxes  upon  real  estate  than  they  ever  did  or  ever  will 
pay  upon  personal  property,  but  even  those  of  our  number  who 
pay  no  direct  taxes  at  ah1  are  thoroughly  practical  in  the  true 
sense  of  the  word.  Thousands  and  thousands  of  men,  and  hun- 
dreds of  legislators,  insist  that  personal  property  shall  be  taxed 
and  can  be  fairly  and  equally  taxed.  But  this  is  all  theory  upon 
their  part.  Not  one  of  them  can  devise  any  plan  by  which  half 
of  it  can  be  taxed  at  all,  or  by  which  any  of  it  can  be  taxed  with 
even  a  decent  approach  to  fairness  and  equality.  Nobody  ever 
succeeded  in  doing  this,  and  nobody  ever  will.  The  idea  of  an/ 
decently  just  system  of  taxation  of  personal  property  is  a  theory 
which  stands  no  more  chance  of  ever  being  put  into  practice 
than  a  railroad  to  the  moon. 

Our  first  objection,  therefore,  and  one  which  to  our  minds  is 
conclusive,  is  that  the  thing  can  not  be  done.  We  have  stated 
a  few  of  the  reasons  why  it  is  impossible  to  collect  a  tax  upon 
personal  property,  bearing  with  uniformity  and  equality  upon 
all  such  property;  but  it  ought  to  be  enough  with  all  sensible 
men  to  show  that  universal  and  unbroken  experience,  extending 
over  many  centuries,  has  proved  that  it  never  was  done  and 
never  could  be  done.  It  is  known  with  certainty  that  the  experi- 
ment had  been  persistently  tried  for  nearly  2,000  years,  and  that 
it  has  always  failed  to  accomplish  anything  but  gross  injustice 
to  develop  fraud  and  perjury,  to  relieve  liars  and  bribers  from 
taxation  and  to  cast  its  burdens  mainly  upon  those  who 
too  Jionest  to  lie  and  too  poor  to  bribe.  The  Romans  had  tre- 
menduous  advantages  for  the  efficient  collection  of  personal  taxes, 
such  as  our  Legislatures  can  never  have.  The  Roman  governors 
had  sense  enough  to  know  that  such  taxes  could  never  be  coli 
lected  writh  any  approach  to  efficiency,  without  the  use  of  tht 
scourge,  the  gridiron  and  the  cross;  and  they  used  these  gentle 


179 


appliances  freely.  The  Egyptian  ta,x  governors  collected  all 
their  taxes  by  the  use  of  the  lash  and  the  bastinado  until  brutal 
England  tyrannically  interfered  and  deprived  these  persons  of 
the  privilege  of  annual  scourging. 

In  these  United  States,  we  are  too  squeamish  to  flog  each  other 
into  the  payment  of  taxes;  and,  therefore,  our  Legislatures  have 
exhausted  their  ingenuity  in  inventing  schemes  for  the  punish- 
ment of  our  souls  by  putting  a  premium  upon  perjury,  official 
and  individual.  The  personal  property  tax  is  not  collected  with 
the  slightest  approach  to  equality,  justice  and  fairness,  in  any 
State,  county  or  town  in  the  Union.  It  remains  just  as  true 
now  as  when  it  was  declared  in  the  Constitutional  Convention 
of  1867:  "  There  is  not  an  assessment-roll  made  out  in  this  State 
that  does  not  both  tell  and  work  lies."  But  what  is  true  of  this 
State  is  equally  true  of  other  States.  There  are  other  States 
in  which  the  assessments  of  personal  property  is  very  much  larger 
than  it  is  in  this  State;  but  that  result  is  gained  by  relieving  a 
few  officials  from  the  disagreeable  necessity  of  telling  lies,  and 
involving  many  thousand  citizens  in  that  predicament.  And 
when  all  is  done,  the  testimony  of  assessors  throughout  the  Union 
is  unanimous  to  the  effect  that  a  large  and  constantly  increasing 
proportion  of  personal  property  escapes  taxation,  and  that,  more 
and  more  every  year,  the  burden  of  taxation  falls  upon  widows 
and  orphans,  or  upon  those  who  are  too  honest  or  too  ignorant 
to  make  out  false  returns.  It  is  roughly  correct  to  say  that  the 
amount  of  perjury  increases  according  to  the  square  of  the 
increase  of  efficiency  in  the  law. 

This  leads  us  to  say  in  the  second  place  that  we  object  to  all 
,ttempts  to  tax  personal  property,  upon  the  ground  that  they 
result  in  enormous  perjury  and  fraud,  most  frightfully  corrupting 
and  demoralizing  to  the  whole  community.    We  are  opposed  to 
any  method  of  taxation  which  can  only  be  enforced  by  giving 
payers  a  choice  between  payment  or  perjury;  because  every- 
[y  knows  that  under  such  circumstances  perjury  will  become 
wide-spread  and  truthfulness  which  lies  at  the  foundation  of 
uman  society,  will  become  undermined. 


18) 

In  the  third  place,  we  maintain  that  an  immense  amount  of 
what  is  called  personal  property,  is  nothing  in  the  world  but  av 
paper  title  to  real  estate;  and  there  is  no  more  sense  in  taxing 
it,  than  there  would  be  in  first  taxing  real  estate  upon  its  value-, 
secondly  taxing  the  deed  to  the  real  estate  over  again,  as  an 
independent  piece  of  property  and  of  the  same  value,  and  thirdly, 
taxing  the  record  of  the  deed  in  the  register's  office,  as  still 
another  independent  piece  of  property  of  the  same  value.    Every- 
body sees  the  absurdity  of  this;  but  few  appear  to  see  the  equal 
absurdity  of  precisely  similar  methods  of  taxing  personal  property. 
Thus  while  every  State  taxes  the  actual  possessions  of  railroad 
companies   within   its   borders,   many    States   tax,   in   addition 
thereto,  the  pieces  of  paper  which  are  called  certificates  of  stock 
in  these  railroad  companies,  and  all  the  States  tax  pieces  of  paper  j 
called  bonds  of  these  companies,  which  represent  nothing  but  a 
lien  upon  the  real  estate  which  has  already  been  once  taxed. 
The  obvious  fact  is  that  all  the  stock  and  bonds  of  a  railroad  j 
corporation,  other  than  those  which  have  been  issued  for  itsj 
rolling  stock  and  furniture,  represents  simply  and  purely  real 
estate.    The  stock  of  more  than  nine-tenths  of  all  the  railroad 
companies  in  the  United  States  represents  nothing  but  the  value 
of  the  right  to  use  the  strip  of  land  over  which  the  railroad  runs. 
All  the  costs  of  the  improvements  upon  that  land,  including  not 
merely  stations,  rails  and  ties,  but  also  the  embankments  and 
gradings,  have  been  paid  for  out  of  the  proceeds  of  mortgage 
bonds.    Where  is  the  sense  or  justice  of  taxing  the  stock  and 
bonds  over  again,  if  the  lands,  improvements  and  equipment] 
have  been  once  taxed?    Precisely  the  same  thing  is  true  about 
telegraph   and  telephone   companies.    The  vice  of  the  present  j 
system  of  taxation  is  that,  while  these  corporations  have  enor 
mous  privileges  over  land,  which  represent  land  values  or  ground;] 
rents  just  as  surely  as  does  the  ownership  of  a  lot  of  land  in  the 
city;  the  farmers,  in  their  wild  anxiety  to  tax  personal  property 
never  think  for  a  moment  of  taxing  the  telegraph  and  telephone 
companies,  as  they  ought  to  be  taxed,  upon  the  value  of  theii 
privileges  in  passing  over  land.    Every  lawyer  knows  that  th< 


181 

air  above  the  land  is  in  law  a  part  of  the  land  itself;  and  the 
telegraph  wire,  which  hangs  in  the  air,  is  as  truly  making  use  of 
land  underneath,  as  if  it  were  laid  in  a  subway.  Street  railways 
have  enormous  privileges  over  the  lands  of  cities ;  which  constitute 
the  entire  value  of  their  stock  and  a  large  part  of  their  bonds; 
and  they  ought  to  pay  regular  taxes  upon  these  land  values.  But 
the  farmers  never  think  of  this;  because  they  are  simply  bent 
upon  making  stockholders  pay  larger  taxes  upon  pieces  of  paper, 
forgetting  that  these  little  pieces  of  paper  can  not  readily  be 
discovered,  while  the  farmers'  own  horses,  cattle,  plows  and  tools, 
are  easily  found  by  the  assessor. 

In  the  fourth  place  we  maintain  that  money  ought  not  to  be 
taxed,  and  that  any  attempt  to  tax  it  is  especially  injurious  to 
farmers  and  other  residents  of  the  rural  districts,  who  are  the 
only  persons  that  desire  to  tax  it.  So  far  as  what  is  called 
money  consists  of  paper,  it  is  clear  that  all  this  paper  is  mere 
evidence  of  debt.  Treasury  notes  represent  a  debt  of  the  United 
States;  and  bank  notes  represent  debts  of  the  banks.  If  the 
property,  which  is  represented  by  these  notes,  is  taxed,  it  ought 
not  to  be  taxed  a  second  time  by  taxing  the  notes  themselves. 
If  that  property  is  not  taxed,  that  only  proves  that  the  Legisla- 
ture, with  the  strongest  desire  to  do  so,  has  never  been  able  to 
invent  any  method  by  which  it  could  tax  that  property;  and  if  the 
Legislature  is  not  able  to  find  and  tax  the  houses,  merchandise, 
food  and  furniture  against  which  these  notes  were  issued  (these 
being  things  which  can  not  be  put  out  of  sight),  how  absurd  it  is 
to  try  to  tax  the  notes  themselves,  which  can  so  easily  be  put 
out  of  sight. 

Gold  and  silver  coins  ought  not  to  be  taxed,  because  they  are 
as  important  to  the  prosperity  of  the  community  as  blood  is  to 
the  life  of  the  individual.  Taxation  tends  to  drive  coin  out  of  the 
State,  and  if  any  successful  method  of  taxing  all  the  coin  and  other 
money  in  the  State  could  be  invented,  all  our  money  would  be 
driven  out  of  circulation  and  a  frightful  prostration  of  business 
would  ensue,  in  which  none  would  suffer  more  than  the  farmers. 
Farmers  always  want  to  get  high  prices  for  their  produce;  and 


182 

no  more  effective  scheme  could  be  devised  for  cutting  down  the 
prices  of  those  products  to  the  lowest  point,  than  a  tax  which 
should  really  reach  every  dollar  of  money  in  the  State.  Even 
under  our  present  imperfect  system,  the  banks,  in  whose  hand 3 
are  substantially  all  the  coins,  have  been  driven  to  reduce  their 
stock  just  as  much  as  possible;  and  a  really  effective  and  uniform 
system  of  taxation  upon  money  would  ruin  every  farmer  in  the 
country. 

Moreover,  money  of  every  kind,  including  coin,  is  nothing  but 
a  representative  of  wealth  and  not  wealth  in  the  best  practical 
sense.  Gold,  in  the  form  of  coins,  is  of  no  earthly  use,  except  for 
the  purpose  of  exchanging  one  kind  of  merchandise  for  another 
Nobody  can  eat  gold  coins,  or  wear  gold  coins,  or  build  a  house 
with  gold  coins,  or  make  a  chair  with  gold  coins,  or,  in  short,  pin 
them  to  any  use  of  any  kind  whatever,  so  long  as  he  keeps  them 
The  only  purpose  for  which  money  is  any  good  at  all  is  the  pur 
pose  of  getting  rid  of  it  as  quickly  as  possible,  for  something  more 
practically  useful.  Accordingly,  no  man  who  is  not  partially 
insane,  ever  carries  any  large  amount  of  money  with  him,  or  keeps 
it  in  his  house.  The  very  richest  men  have  the  least  amount  o: 
money.  Mr.  Eussel  Sage,  who  is  reputed  to  be  worth  $50,000,000 
never  possesses  so  much  as  five  dollars  in  actual  money,  if  he  can 
help  it.  He  is  supposed  to  have  a  largje  amount  of  money  in 
banks,  but  he  does  not  have  a  dollar  of  his  own  in  any  bank.  All 
which  he  has,  is  the  promise  of  banks  to  pay  a  large  sum  to  him 
whenever  he  wants  it,  but,  as  a  matter  of  fact,  he  never  doee 
want  it  and  never  takes  possession  of  it. 

In  the  fifth  place,  we  maintain  that  as  nothing  remains  in  the 
way  of  personal  property,  except  animals,  merchandise,  furniture 
and  the  means  of  transporta,tion,  such  as  wagons  and  cars,  there 
is  no  sense  in  attempting  to  tax  these  things.  We  have  showi 
that  merchandise  can  not  be  taxed  with  any  kind  of  uniformity 
justice  or  equality.  Even  if  it  could  be  so  taxed,  the  tax  woulo 
be  added  to  the  market  price,  and  it  would  be  distributed  aiuon< 
all  the  people  in  proportion  to  what  they  use,  and  not  in  propor 
tion  to  what  they  own.  Farmers  mechanics  and  laborers  generally 


183 

would,  therefore,  pay  a  vastly  larger  proportion  of  such  a  tax 
than  would  rich  men.  Every  loaf  of  bread  would  be  made  to  cost 
more,  and  since  poor  men  eat  as  much,  or  more,  bread  than  rich 
men  do,  poor  men  would  pay  a  larger  proportion  of  such  a  tax. 

It  is  obvious  that  a  tax  upon  animals  and  wagons  would  bear 
very  much  more  severe  upon  farmers  than  upon  any  other  class 
in  the  community;  and,  in  experience,  this  is  found  to  be  a  fact. 
Taxes  upon  furniture  also,  as  we  have  (already  shown  will  always 
be  laid  much  more  heavily  upon  farmers  than  upon  other  people. 
But  it  is  hardly  necessary  to  say  more  upon  this  point  for  there 
can  be  no  doubt  that  if  the  farmers  of  this  State  once  understood 
that  the  only  kind  of  personal  property  which  could  be  taxed 
was  furniture,  animals  and  wagons,  they  would  be  unanimously 
opposed  to  any  such  tax. 

The  Question  of  Justice. 

I  have  been  asked  by  one  of  your  committee  whether  justice 
does  not  require  that  personal  property,  which  gives  rise  to 
most  of  the  litigation  in  this  State,  and  which  otherwise  requires 
the  service  of  the  State  for  its  protection,  ought  not  to  pay  its 
shares  of  tax  accordingly.  This  raises  the  question  of  justice,  and, 
of  course,  leads  us  at  once  into  that  region  of  theory  for  which  most 
advocates  of  the  personal  property  tax  express  great  contempt. 
We,  however,  do  not  sympathize  with  this  contempt  and  therefore 
believe  that  the  question  is  a  fair  and  important  one.  Our 
answer  is  that  the  laws  of  nature  take  care  of  this  matter  of 
taxation,  and  that  personal  property  is  taxed  to  the  very  last  cent 
of  all  which  it  ought  to  pay  by  a  natural  law  which  needs  no 
statute  for  its  enforcement.  Nature  compels  every  owner  of 
personal  property  to  pay  a  tax,  which  is  called  rent,  and  which 
everywhere,  at  all  times,  and  under  all  circumstances/  exacts 
from  every  owner  of  personal  property  the  full  cost  and  value  of 
all  the  benefits  which  government  can  give.  Wherever  personal 
property  accumulates  in  great  masses,  the  rent  of  land  is  exceed- 
ingly ,high.  Wherever  there  is  very  little  personal  .property 
rent  is  very  low,  and  where  there  is  no  personal  property  at  all, 


184 

there  is  no  rent.  The  difference  between  the  enormous  annual 
value  of  the  land  on  Manhattan  island,  and  the  small  annual 
value  of  the  land  in  Schoharie  county  is  proportioned  with 
wonderful  accuracy  to  the  difference  between  the  values  of  personal 
property  in  the  two  counties.  Land  has  no  other  value  than 
such  as  rent,  either  collected  in  the  present,  or  expected  in  the 
future  gives  to  it.  And  every  penny  of  rent  is  collected  out  of 
personal  property,  since  there  is  nothing  else  out  of  which  it  can  be 
paid.  Personal  property,  therefore,  not  only  pay®  its  share  of 
taxation,  but  it  pays  all  taxation.  Nature  takes  care  of  this,  and 
the  interference  of  Legislatures  only  spoils  the  work  which  nature 
has  already  done.  Personal  property,  we  repeat,  pays  a  t 
which  is  more  than  equal  to  all  the  taxes  which  this,  or  any  other 
government,  requires.  It  pays  them  to  the  owners1  of  the  land; 
and  all  which  the  State  has  to  do,  is  to  collect  from  the  landowners 
enough  of  the  tax  which  the  owners  of  personal  property  Mve  paid 
to  them  to  defray  the  expenses  of  government. 

Our  Practical  Proposition. 

We  have  thus  answered  very  briefly  all  the  reasons  which,  we 
have  ever  heard  assigned  for  any  attempt  by  Legislatures'  to 
collect  this  unnatural  tax  from  personal  property.  Nevertheless, 
if  the  farmers  enjoy  taxing  themselves  over  two  or  three  times, 
it  is  not  for  us  to  object.  All  which  wre  ask  is  that  the  people 
of  those  counties  which  do  not  take  the  same  view,  shall  be  left 
free  10  choose  for  themselves;  and  at  the  same  time,  we  do  not  ask 
that  their  burdens  shall  be  lightened  in  the  smallest  degree.  We 
are  willing  that  they  should  pay  any  proportion  of  State  taxes 
which  the  people  of  the  entire  State  may  think  fair  and  just. 
We  only  ask  that,  when  their  quota  of  taxation  is  assigned, 
they  shall  be  allowed  to  collect  it  in  their  own  way. 

Our  proposition,  then,  is  that  each  qounty  be  left  free  to 
decide  by  a  vote  of  its  own  citizens,  whether  the  taxes  which  it 
raises  for  local  purposes  shall  be  collected  from  both  real  estate 
and  personal  property,  or  from  real  estate  alone.  What  reasonable 
objection  can  there  be  to  this  request?  It  makes  no  difference, 


185 

whatever,  to  the  taxpayers  of  the  interior,  how  we  in  New  York 
nd  Brooklyn  collect  our  local  taxes.  They  will  neither 
ain  or  lose  one  dollar,  whether  we  collect  our  taxes 
rom  real  estate  alone  or  from  personal  property  alone,  or 
rom  both  real  and  personal  property.  Our  local  taxes  constitute 
robably  nine-tenths  of  all  our  taxes.  So  far  as  the  portion  which 

we  ought  to  pay  to  the  State  is  concerned,  we  are  willing  that  that 
shall  be  ascertained  in  the  present  clumsy  fashion  if  you  gentle- 
nen  of  the  interior  prefer;  or  we  are  willing  that  it  should  be 
iscertained  in  some  other  manner  even  more  favorable  to  you. 
Since  you  believe  that  you  can  put  thumbscrews  in  effective  opera- 
ion  in  the  interior,  so  as  to  discover  a  large  amount  of  personal 
)ropt-rty  and  tax  it  all  over  again,  we  would  be  willing  to  com- 
>romise  by  adding  for  State  purposes  as  large  a  proportion  to 
in»  local  yaluations  of  real  estate  as  your  interior  valuations  of 
)ersonal  property  bear  to  your  valuations  of  real  property.  Thus, 
o  illustrate,  let  us  suppose  that  New  York  and  Brooklyn  should 

vote  to  exempt  all  personal  property  from  taxation,  while  the 
•est  of  the  State  pursues  the  old  law.  Let  us  suppose  that  in 
he  interior  counties,  where  personal  property  is  assessed  and 
axed,  it  appears  that,  taken  together,  personal  property  is  valued 

at  twenty  per  cent  of  all  the  real  property.  We  should  be  willing 
o  have  twenty  per  cent  added  to  the  value  of  real  property  in 
ew  York  and  Brooklyn,  for  the  purpose  of  ascertaining  the 
hare  which  we  should  pay  of  State  taxes,  provided  we  were 
eft  to  collect  these  taxes  in  our  own  way.  Under  such  an 
irrangement,  it  is  perfectly  certain  that  our  two  cities  would 
>ay  a,  larger  share  of  such  taxes  than  they  do  at  present.  And 
'et  we  taxpayers  would  be  glad  to  accept  such  an  arrangement, 
)erause  we  know  very  well  that  the  business  of  the  two  cities 

would  so  greatly  prosper  and  value  of  real  estate  increase  so 

much  that  we  should  be  benefited  quite  as  much  as  you  would  be. 
Although  we  have  undertaken  to  answer  at  such  length  the 

question  so  constantly  put  to  us,  "Why  should  taxation  upon 
)ers<>nal  property  be  abolished?"  yet  our  real  answer  is  to  ask 

another  question:  "Why  should  the  citizens  of  New  York  and 
Brooklyn  be  compelled  to  tax  personal  property  for  local  pur- 


186 

poses  against  their  will?"  Why  should  the  farmers  of  the 
interior  compel  us,  who  live  in  cities,  to  maintain  a  system  of 
taxation  which  we  do  not  believe  in,  which  greatly  injures  UB, 
and  which  does  not  benefit  them  in  the  smallest  degree? 

Conclusion. 

In  conclusion,  therefore,  we  ask  that  the  local  authorities  of 
each  county  be  left  to  decide  for  themselves  how  they  will  col- 
lect their  own  taxes.  We  do  not  ask  for  any  lessening  of  the 
share  of  taxes  which  we  now  pay;  on  the  contrary,  we  offer  to 
pay  more  to  the  State  than  we  do  now  pay.  We  ask  for  the 
right  of  home  rule  and  self-government.  We  ask  that  methods 
of  taxation,  which  may  perhaps  suit  the  people  of  other  counties, 
shall  not  be  forced  upon  us  to  our  great  injury,  and  without  any 
benefit  to  them. 

In  this  demand,  we  represent  substantially  all  the  wealth  and 
intelligence  of  these  two  cities;  all  of  the  taxpayers  who  have 
given  public  expression  to  any  views  upon  the  subject;  all  per- 
sons who  have  given  to  it  any  careful  study;  a  large  majority, 
at  least,  of  the  owners  of  real  estate,  and  finally,  that  great  mass 
of  intelligent  laboring  men,  out  of  the  fruits  of  whose  labor, 
in  the  long  run,  all  taxes  must  be  paid.  We  admit  that  there 
are  many  among  all  of  these  classes  who  have  paid  no  attention 
to  this  subject,  and  who  have  suffered  from  the  present  unjust 
and  barbarous  methods  of  taxation  without  knowing  what 
oppressed  them.  But  we  can  assure  you  that  the  number  of 
those  who  are  awakening  to  a  comprehension  of  this  subject, 
is  continually  growing,  and  that  there  is  no  party  in  opposition 
to  those  views,  to  be  found  in  these  two  cities,  except  those  who 
have  given  no  thought  to  the  subject,  and  who  are  simply  opposed 
to  a  change  which  they  do  not  understand.  We  ask  you  to  frame 
a  measure  which  shall  put  an  end  to  this  incessant  conflict 
between  the  city  and  the  country,  by  doing  justice  to  both;  and 
leaving  each  free  to  decide  according  to  its  own  convictions 
and  its  own  interests.  And  we  assure  you  that  no  measure 
could  possibly  be  more  popular  and  at  the  same  time  more  states- 
manlike than  the  extension  of  the  principle  of  home  rule  and 
self-government  to  matters  of  taxation. 


187 

George  S.  Coleman,  recalled. 
By  Mr.  Guenther. 

Q.  In  view  of  those  corporations  incorporated  in  other  States 
and  doing  business  here,  which  are  assessed  upon  personal  prop- 
erty to  the  extent  say  of  $20,000,  they  having  a  capital  of 
$100,000  in  other  States,  can  you  suggest  any  amendment  to  the 
present  law  whereby  we  can  reach  them  for  the  full  amount  of 
their  capital  stock  for  the  purposes  of  taxation?  A.  I  can  not 
suggest  a  method  that  would  be  consistent  with  the  way  we 
assess  our  own  corporations:  I  understand  the  law  which  says 
that  the  tax  on  property  nm?t  be  on  property  within  this  State; 
if  one  of  our  own  corporations  had  invested  half  of  its  capital 
in  New  Jersey  in  a  plant  there,  that  plant  would  be  exempt;  the 
State  in  taxing  the  franchise  might  tax  it  upon  the  full  value 
of  its  capital,  but  I  think  that  has  been  construed  as  unjust 
and  has  been  modified  so  as  to  tax  it  only  on  the  capital  invested 
in  the  State;  I  might  have  expressed  myself  clearly  about  that 
when  corporations  went  out  of  the  State  to  evade  taxation,  I 
understood  you  to  mean  corporations  simply  organizing  in  another 
State,  but  doing  business  here,  that  is  what  I  meant  when  I  said 
they  could  be  taxed  here. 

The  committee  then  went  into  executive  session  and  on  motion 
decided  to  meet  again  December  22,  1892,  at  2  p.  m.,  same  place. 

Superior  Court,  Part  2, 
New  York,  December  22,  1892. 
The  committee  met  pursuant  to  adjournment. 

TV.  H.  Wood,  called  as  a  witness,  being  duly  sworn,  testified  as 
follows : 

By  Mr.  Creamer. 

Q.  Mr.  Wood,  your  full  name?    A.  Q.  H.  Wood. 
Q.  You  are   chairman  of  the  board   of  assessors?    A.  Chair- 
man of  the  State  Board  of  Assessors. 


188 

Q.  How  long  have  you  been  a  member  of  the  board  of  asses- 
sors? A.  Since  the  28th  of  June,  1892. 

Q.  Previous  to  that  did  you  have  any  experience  in  connection!^ 
with   matters   of   taxation   in   our   State?    A.  Not  particularly 
with  reference  to  the  State;  I  have  served  in  the  board  of  super- 
visors in  my  county,  and  on  the  committee  of  equalization,  which  ^ 
has  something  to  do  with  tax  laws. 

Q.  Have  you  read  the  resolution?    A.  Yes,  sir. 

Q.  Will  you  please  give  the  committee  your  views  concerning 
the  taxation  of  personal  property?  A.  Well,  I  think  the  laws 
should  be  amended  so  as  to  repeal  the  exemption  of  debts  on 
personal  property. 

Q.  As  against  real  estate  and  personal  property?  A.  As 
against  real  estate  and  personal  both;  I  think  that  there  is  the 
main  avenue  through  which  a  great  portion  of  the  personal 
property  of  Ihe  State  escapes  taxation;  there  should  be  a  certain 
amount  of  personal  property,  or  personal  property  of  a  certain 
class,  exempt;  in  some  localities  the  assessors  now  follow  the 
plan  of  assessing  the  farm  stock  and  implements  as  personal 
property.  Of  couse,  under  the  statutes  all  forms  of  personal 
property  are  taxable  and  I  think  a  reasonable  limit  of  exemption 
should  be  made  by  the  law,  but  all  above  that  should  be  subject 
to  taxation  just  the  same  as  real  estate. 

Q.  In  your  last  report,  I  believe,  Mr.  Wood,  you  state  that  it 
is  the  judgment  of  the  members  of  the  board  that  there  is  some 
4,000,000,000  of  untaxed  personal  capital  in  the  State?  A.  That 
is  the  report  of  the  former  board,  but  I  believe  that  that  is  the 
fact,  that  there  is  about  that. 

Q.  What  proportion  do  you  know  this  county  would  include  in 
that  sum?  A.  I  am  unable  to  state;  I  have  made  no  persona] 
examination  of  that,  but  I  should  assume  that  it  T^ould  have  al 
least  forty-five  to  fifty  per  cent,  perhaps  more,  as  there  is  a  largei 
amount  of  corporate  property  in  the  city  and  county  of  New 
York. 

Q.  Are  you  familiar  with  the  views  of  the  previous  board,  01 


any   members   of  it,    concerning  how   that  property   should  be 


189 

peached  and  placed  on  the  rolls  and  made  subject  to  taxation? 
A.  Only  as  expressed  in  the  report  for  1890,  the  last  report 
made. 

Q.  Please  give  it?  A.  Their  view  was  the  adoption  of  a  listing 
system  similar  to  that  in  the  State  of  Ohio  and  Massachusetts, 
a/nd  also  the  repeal  of  the  exemption  of  debts  on  personal  prop- 
erty—  that  provision  which  permits  an  individual  to  swear  off 
the  personal  taxation  on  the  amount  of  his  indebtedness. 

Q.  I  think  there  is  a  doubt  in  the  minds  of  the  people  as  to 
whether  it  is  the  intention  to  tax  all  personal  property,  sudi  as 
lefined  in  the  statute,  including  household  furniture  and  other 
property  of  somewhat  similar  description;  I  take  it  that  the  main 
)bject  of  the  committee  representing  the  Legislature,  and  all 
Jiose  who  are  interesting  themselves  in  relation  to  this  question, 
.s  to  reach  first  of  all  interest  and  dividend  paying  personal 
property,  which,  I  suppose,  this  4,000,000,000  covers,  without 
xmching  household  goods?  A.  That  has  no  reference,  I  think, 
;o  household  effects. 

Q.  I  state  that  in  order  to  get  an  expression  of  the  opinion 
)f  the  State  assessor  as  to  whether  that  was  covered  by  the 
1,000,000,000,  or  whether  that  4,000,000,000  figured  up  that  sum 
without  including  those  ordinary  effects  of  every  citizen?  A.  I 
lave  not  any  knowledge  as  to  the  statement  made  by  the  pre- 
dous  board,  other  than  that  gained  by  inference,  reading  the 
•eport  and  conversations  with  the  gentlemen  who  drew  it;  my 
mpression  is  that  it  is  intended  to  convey  the  idea  that  there 
ire  4,000,000,000  of  personal  property  that  escapes  taxation  with- 
>ut  including  such  items  as  household  furniture,  or  items  of 
:hat  kind,  or  ordinary  personal  property;  it  is  intended  to  convey 
;he  notion  that  that  is  represented  by  what  you  call  dividend 
mying  personal  property,  stocks  in  corporations,  etc. 

Q.  Now,  what  is  the  theory  of  the  board  of  assessors,  as  far  as 
pou  known,  as  to  how  this  property  should  be  assessed  —  per- 
jonal  property —  all  alike  at  an  equal  percentage  of  taxation?  A. 
Chat  is  a  subject  to  which  I  have  given  very  little  reflection;  the 


190 

duties  of  the  State  Board  of  Assessors  have  very  little  to  do  with 
personal  property  as  a  rule;  we  are  confined  to  the  equalization  of 
assessments  between  the  various  counties  —  the  assessment  of 
real  estate  and  the  equalization,  on  review,  made  by  the  various 
boards  of  supervisors  wherever  there  is  an  appeal  made;  my 
own  opinion  is  that  some'  form  of  taxation  of  corporate  stocks, 
somewhat  similar  to  the  method  in  which  bank  stocks  are  taxed 
at  present,  would  be  advisable. 

Q.  Could  you  reach  trust  companies  and  express  companies 
by  the  same  method  ?  A.  You  could  not  reach  express  companies. 

Q.  It  was  stated  previously  by  Tax  Commissioner  Fietner  —  I 
understood  him  to  state  that  it  was  their  intention,  and  I  was  a  afi 
little  in  doubt  myself  as  to  whether  that  could  be  done;  I  wish 
you  could  enlighten  me?  A.  I  don't  think  you  can  reach  an 
express  company  in  that  way,  or  a  trust;  you  can  only  reach  a 
corporation  where  the  books  are  subject  to  examination,  and 
most  of  the  express  companies,  as  I  understand  it,  are  not  really 
corporations;  they  are  in  the  nature  of  partnerships  —  joint- 
stock  associations. 

Q.  What  was  the  plan  suggested  of  taxation?  A.  The  plan 
that  I  suggest  to  reach  a  certain  class  of  corporations  is  similar 
to  that  employed  in  the  taxation  of  bank  stock;  to  have  the 
stock  assessed  to  the  corporation,  and  paid  by  it  as  upon  each 
individual  stockholder;  in  a  national  bank  the  stockholder  does 
not  pay  the  tax  upon  his  stock;  it  is  assessed  to  the  bank,  aod 
the  bank  pays  the  taxes. 

Q.  What  law  should  be  amended  to  reach  that  result  if  so 
desired?  A.  I  don't  know  the  specific  statute,  but  it  is  an  iincad- 
ment  of  the  statute  in  relation  to  the  taxation  of  corporations. 

Q.  As  regards  personal  property,  can  you  inform  the  committee  h 
when  it  was  that  the  laws  were  amended  exempting  some  of  those 
corporations  entirely  from   all  taxation,  other  than  what  they 

0 

contribute  towards  the  State?  A.  No;  I  am  unable  to  give  you 
the  dates,  because  those  exemptions  have  occurred  a/t  different 
times,  not  all  at  one  time.  \ 

K 


ank  shares  are  now  assessed  to  the  bank?    A.  Yes,  sir. 
Q.  All  corporations  or£)anized  specially  and  under  the  general 
aw?    A.  That  is  a  subject  that  I  should  want  to  study  a  little 
s,  more  before  I  give  an  opinion  as  to  that;   you  might  be  able  to 


Q.  Would   that   include   business   association?    A.  I   think   it 
>  would;  I  see  no  reason  why  a  business  corporation  should  not  pay 


Q.  Did  this  decision  in  the  National  Express  Company's  case 
a  affect  any  State  taxation  as  well  as  local?  A.  Well,  it  affected 
ih  n  this  way,  that  the  State  taxes  are  collected  as  a  rule  with,  the 
ocal  taxes,  in  the  same  levy,  in  most  of  the  counties. 

Q.  The  State  will  lose?    .A.  Yes,  sir. 


191 

Q.  Do  you  remember  any  time?    A.  No,  sir;  I  do  not. 

Q.  Well,  you  would  assess  the  corporations  the  same  as  the 


•each  some;  it  is  more  a  matter  of  detail. 


fair  tax  upon  its  stock  as  well  as  any  other. 


Q.  Have  the  State  Board  of  Assessors  taken  any  action  as 
egards  removing  the  effect  of  the  law  as  contained  in  that  deci- 
ion?  A.  Nothing  except  in  the  general  recommendations  that 
have  been  made  by  the  board  in  their  former  reports,  and  such 

in  is  we  will  make  to  the  coming  Legislature;  there  is  no  other  step 

a  r  we  can  take. 


Q.  Did  they  consult  with  the  Attorney-General  about  prepar- 
h  ing  an  act  to  amend  the  law  affected  by  the  decision,  seeing  that 
State  loses  revenue?    A.  That  hardly  falls  in  the  province  of 
3 lithe  State  Assessors. 

Q.  Your  board  has  been  subject  to  much  criticism  from  the 
soknanner  of  alloting  certain  sums  to  different  counties  in  your 
annual  equalization?    A.  Yes,  sir. 

Q.  Will  you  please  give  the  committee  some  opinion  on  that 
ubject  which  no  doubt  will  clear  up  much  doubt  concerning  it? 
L  The  duties  of  the  State  Board  of  Assessors  are  to  collect  first 
information  from  each  county  and  determine  the  rate  of  assess- 
nent  as  to  true  value  —  that  is,  the  ratio  that  the  assessment 
aears  to  the  true  value.  They  gjet  that  information  in  various 
svays,  by  conference  with  the  boards  of  supervisors,  by  lists  of 
Dona  fide  sales,  excluding  all  judicial  sales,  and  all  sales  between 


192 

members  of  the  same  family,  and  determine  from  that  mass  of 
evidence  the  rate  of  assessment  in  each  of  the  various  counties 
in  the  State,  and  when  that  rate  is  once  determined  for  each 
county,  the  equalization  table  of  values  is  simply  a  matter  of 
arithmetical  computation. 

Q.  Wherever  the  assessed  value  is  a  smaller  percentage  thaa 
you  think  it  should  be  in  proportion  to  other  counties,  you  do 
that?  A.  No,  sir;  that  is  not  the  way  in  which  an  equalization 


table  is  made. 

Q.  Does  not  that  govern  you  at  all  when  you  see  property 
assessed  at  a  small  percentage?  A.  I  will  explain  how  an  equali- 
zation table  is  computed,  and  then  you  will  see  it  is  not  a  matter 
of  taking  off  or  putting  on  by  the  board ;  the  assessors  deter- 
mine as  soon  as  they  can  from  the  evidence  they  are  able  to 
gather  of  this  kind  that  I  have  detailed  before,  and^the  rate  of 
assessment  in  each  county  of  the  State,  and  with  that  as  a  basis 
the  first  step  in  the  table  is  to  find  what  the  full  value  of  every 
county  would  be  if  it  were  assessed  at  full  value,  which  is  a  simple 
operation  of  dividing  the  assessed  value  by  the  rate  it  is  assessed 
at,  that  gives  you  the  full  value  of  the  county;  the  sum  total  of 
that  will  be  the  full  value  of  the  State,  and  the  full  value  of  each 
county  divided  by  the  full  value  of  the  State  will  give  you  the 
equalized  percentage  of  the  county,  and  the  total  assessed  value 
of  the  State  multiplied  by  that  ratio  will  §ftve  the  total  equalized 
value  of  the  county;  that  is  the  way  in  which  this  table  is  arrived 
at,  and  the  result  there  where  it  says  so  much  added  or  so  much 
taken  off  those  columns  are  simply  to  show  plainly  what  the 
result  is  and  not  the  addition  of  an  arbitrary  sum  at  all. 

Q.  On  this  basis  it  shows  there  has  been  no  dereliction  of 
duty  on  the  part  of  the  assessors,  but  they  have  lacked  informa- 
tion. A.  There  is  a  variation  of  opinion;  some  counties  assess 
at  seventy-five  or  eighty  and  eighty-five  per  cent  of  the  value 
and  some  counties  as  low  as  fifty  per  cent. 

Q.  Take  the  agricultural  lands;  how  do  you  find  them;  uniform? 
A.  It  is  not  uniform,  but  it  will  go  nearly  seventy-five  per  cent. 

Q.  As  high  as  that?    A.  Of  its  true  value. 


193 

Q.  What  it  will  bring  at  a  sale?    A.  Yes,  sir. 

Q.  Seventy-five  per  cent?    A.  Yes,  sir. 

Q.  As  high  as  that  in  St.  Lawrence  county?  A.  I  think  it  is 
higher  in  St.  Lawrence  county;  St.  Lawrence  is  credited  with  a 
higher  percentage  than  that. 

Q.  Can  you  give  us  from  memory  what  the  rate  of  taxation 
is  at  present  in  some  of  those  counties  where  the  assessed  value 
is  as  high  as  that?  A.  I  can  give  you  St.  Lawrence,  I  think 
that  is  eighty. 

Q.  The  assessed  value  is  eighty?    A.  Yes,  sir. 

Q.  What  about  the  rate  of  taxation?    A.  It  is  assessed  at  eighty 

r  cent. 

Q.  What  is  their  county  tax?  A.  I  could  not  give  you  that  from 
memory  . 

Q.  Do  you  know  what  the  rate  runs  at  on  such  a  valuation?    A. 

o ;  I  could  not  tell  you  as  to  that. 

Q.  Two  or  three  or  four  per  cen^?  A.  I  could  not  tell  you  as 
o  that,  because  the  rate  varies  in  every  town. 

Q.  Isn't  there  in  your  knowledge  any  case,  or  any  town,  that 
ou  can  give  the  committee  so  as  to  form  a  conclusion  as  regards 

hat  agricultural  land  is  bearing  in  the  way  of  taxation?    A. 

have  not  the  report  of  the  board. 

Q.  There  is  no  one  case  that  occurs  to  you  just  now?    A.  No,  sir. 

By  the  Chairman. 

Q.  Could  you  give  us  the  rate  of  any  agricultural  town  in 
Kit  chess  county?  A.  It  varies  there;  it  is  impossible  for  me  to 

you  the  rate  in  any  town. 
Q.  I  didn't  know  but  what  you  would  be  able  to  tell  me  for 
>ine  one  town  in  your  own  county?    A.  It  varies  from  year  to 
['ear  in  proportion  to  the  increase  or  decrease  of  town  expenses. 
Q.  I  didn't  know  but  what  there  might  be  some  one  town  in 
>utchess  county  with  which  you  were  more  familiar,  last  year? 
..  For  instance,  I  can  give  you  the  county  of  Columbia,  that  was 
dollars  on  1,000  last  year,  and  the  county  of  Chautauqua  was 
iree  dollars  and  eighty-one  cents;  that  was  the  general  rate. 
Q.  On  $1,000?     A.  Yes,  sir. 
25 


194 

By  Mr.  Guenther. 

Q.  What  is  it  in  Erie?  A.  I  don't  know  what  it  is  in  Erie;  we 
only  get  that  when  they  bring  an  appeal. 

By  the  Chairman. 

Q.  Don't  you  consider  that  a  very  low  rate  of  taxation  compared 
with  the  taxation  rate  in  cities  as  you  know  them  to  be?  A.  Yes, 
sir;  ,the  rate  of  taxation  is  lower,  of  course,  in  the  agricultural 
counties  than  it  is  in  the  cities,  because  there  is  not  so  uiuch.1 
local  expense. 

Q.  What  is  the  rate,  for  instance,  in  the  city  of  Poughkeepsie? 
A.  About  two  dollars  and  fifty  cents,  I  think. 

By  Mr.  Creamer. 

Q.  On  $1,000?    A.  Two  dollars  and  fifty  cents  a  hundred. 

Q.  And  in  the  county?  A.  I  think  I  was  in  error  in  the  other, 
counties  too;  I  don't  recollect  the  exact  figures. 

Q.  Is  there  any  town  in  Dutchess  county  that  you  can  give 
the  committee  what  the  rate  is?  A.  No,  sir;  there  is  no  town 
there  that  I  can;  I  live  in  the  city  of  Poughkeepsie;  I  don't  pay 
any  taxes. 

Q.  The  county  of  Dutchess,  according  to  the  census,  lost  popu- 
lation  from  1880  to  1890?  A.  Yes,  sir. 

Q.  To  what  do  you  attribute  that?  A.  I  think  it  is  th 
tendency  of  modern  civilization  for  people  to  go  to  the  cities— 
to  drift  away,  and  the  change  in  the  manner  of  local  employ 
ment;  there  is  not  as  much  profit  in  smaller  farms;  the  competi 
tion  of  the  large  farms  in  the  west  has  brought  down  the  retur 
for  agricultural  labor,  so  that  men  are  seeking  other  employmei 

Q.  And  the  wages,  how  are  they?    A.  And  the  wages  remai 
not  much  different  from  what  they  were  ten  or  fifteen  years  aji 

Q.  You  think  then  that  it  was  principally  on  farms  that  thei 
decrease  occurred?  A.  Yes,  sir;  the  manufacturing  villages  and 
cities  increased. 

Q.  This  decrease  then  in  Dutchess  is  purely  an  agricultural 
case?  A.  Yes,  sir;  there  are  these  facts  that  you  want  to  take 


195 

ito  consideration,  that  the  rate  of  taxation  in  country  districts 
•  city  districts  depends  very  much  on  the  cost  of  local  govern- 
ent  —  that  the  rate  of  State  taxation  for  the  country  is  pre- 
sely  the  same  as  it  is  for  the  city,  but  the  cost  of  county  or 
)wn  government  makes  the  difference  in  the  rate;  it  will  vary 
ae  dollar  in  different  towns;  some  towns  in  the  counties  of 
utchess  have  a  very  high  rate  and  some  have  a  low  rate;  some 
ave  a  big  village  in  them  with  a  great  deal  of  expense;  I  know 

rming  towns  where  the  total  expense  of  the  town,  county  and 
tate  tax  is  not  over  $2,000. 

Q.  The  injustice  to  the  agricultural  districts  would  come  in 
le  equalization,  supposing  that  the  values  are  not  uniform?  A. 
he  purpose  of  equalization  is  to  provide  against  that  injustice 
a  the  part  of  the  State  taxes. 

Q.  Suppose  that  the  basis  of  valuation  in  St.  Lawrence  county 

eighty  per  cent  and  in  Westchester  county  it  is  only  forty- 
ve  per  cent,  when  the  State  assessors  come  to  equalize  how  do 
on  settle  that  apparent  inequality?  A.  That  was  the  matter 
int  I  was  explaining;  the  State  Board  of  Equalization  (the  State 
oard  are  a  part  of  that  body)  they  take  the  State  throughout 
Qd  find  the  rate  of  assessment  in  each  county,  and  then  from 
lat  rate  of  assessment  and  its  assessed  value  we  find  what  we 

nu  the  full  value  —  what  it  would  be  if  assessed  at  100  per 

nt  of  its  value;  then  the  sum  of  the  sixty  counties  will  be  the 
)tal  full  value  of  the  State,  and  the  full  value  of  the  particular 
ounty  divided  by  the  total  full  value  of  the  State  will  give  you 
ratio  that  that  county  ought  to  bear;  it  is  simply  an  arith- 
letical  computation. 

Q.  Do  you  mean  to  say  that  after  the  board  of  equalization 
leets  for  the  purpose  of  equalizing  among  the  several  counties 
tiat  you  ascertain  the  full  value  in  each  county,  compare  it  with 
tie  value  actually  made  up  by  the  assessors?  A.  Yes,  sir;  we 
scertain  the  full  value  in  every  county  in  the  State. 

Q.  Can  you  furnish  the  committee,  at  the  next  hearing  you 
ttend,  with  a  statement  showing  the  last  ascertainment  of  the 
alues  fixed  by  the  assessors  in  the  several  counties,  and  the 
alues  reached  by  you  as  being  the  full  and  true  values?  A. 


196 


Yes,  sir;  I  think  I  can  get  that  to  you  this  afternoon;  I  have 
memorandum,  I  think,  in  my  valise  in  my  hotel. 

Q.  I  think  almost  every  witness  that  has  preceded  you 
has  indorsed  the  proposition  of  divorcing  the  State  taxes  fro 
local  taxes  altogether;  in  other  words,  collecting  them  separal 
what  have  you  to  say  to  that?  A.  That  is  a  question  as  to  tl 
convenience  of  taxation;  I  don't  see  any  particular  reason 
having  the  State  taxes  collected  separately,  or  why  they  shoi 
not  be  collected  and  levied  at  the  same  time. 

Q.  In  that  connection  the  witnesses  have  advocated  that 
estate  should  be  relieved  from  taxation  for  general  and  Si 
purposes;  now,  in  that  connection  you  see  this  question  of 
zation  among  the  counties  would  be  done  away  with  altogether 
what  do  you  think  of  that  proposition?    A.  Well,  if  it  is  poll 
sible  to  raise  the  revenue  of  the  State  by  fair  taxes  in  oth€N 
forms  to  the  relief  of  real  estate,  I  see  no  objection  to  it;  it  wouli 
remove  the  question  of  equalization  as  between  the  counties,  bul 
you  would  still  have  to  provide  a  court  for  the  review  of  equa|| 
zation  made  by  boards  of  supervisors,  which  is  at  present  th 
State  assessors. 

Q.  That  would  be  entirely  a  local  matter?    A.  Yes,  sir. 

Q.  The  Legislature  could  lay  down  a  line  of  procedure  fl 
local  authorities?  A.  Yes,  sir;  if  you  could  get  the  boards  ( 
supervisors  to  overlook  the  local  advantages  in  making  up  th 
table  of  equalization. 

Q.  Of  course,  they  would  have  to  follow  the  law?    A.  Yes,  si 

Q.  Now,  to  make  it  plain,  suppose  that  ways  and  means  caN 
be   devised   for   the   support   of   the   general   government   fro]< 
sources  other  than  levying  a  tax  on  real  estate  would  you  recori 
mend  that?    A.  Well,  I  should  if  those  means  can  be  devise* 
in  such  a  way  as  not  to  drive  capital  and  business  corporation 
and  the  other  species  of  property  upon  which  the  revenue  of  tl 
State  should  be  raised,  out  of  the  State. 

Q.  In  that  connection  do  you  recall  any  instance  where, 
your  judgment,  capital  has  been  driven  from  the  State  by  restri 
tions  affecting  corporations?    A.  I  know  of  one  instance  whe 
a  corporation  was  organized  under  the  laws  of  the  State  of  Nc 
York  and  reorganized  under  the  laws  of  West  Virginia  for  tl 


197 

rpose  of  avoiding  the  stringent  tax  laws  of  the  State  of  New 

irk. 

Q.  Now,  can  you    tell    the   committee  what    particular    pro- 

sions  of  the  tax  laws,  resulted  in  the  transfer  of  that  corpora- 

>n  from  the  State  of  New  York  to  the  State  of  West  Virginia  ? 

They  desired  to  reorganize  and  increase  their  capital  stock 
think  from  1,000,000  to  3,000,000,  and  one  of  the  things  that 
jy  sought  to  avoid  was  the  payment  of  the  fee  on  the  incorpora- 
m  of  the  company;  I  think  it  is  one-eighth  of  one  per  cent. 
Q.  Would  you  suggest  any  modification  of  the  law  in  regard  to 
e  levying  of  that  tax  on  incorporation?  A.  I  think  you  would 
rive  at  the  same  result  if  it  was  lessened;  my  belief  is  that  the 
nnation  of  large  corporations  in  the  State  of  New  York  has  very 
uch  decreased  since  the  passage  of  that  act  on  account  of  that 
ovision;  wherever  it  was  possible  for  them  to  organize  under 
e  provisions  of  the  laws  of  another  State  and  do  business  here 
ey  have  done  so. 

Q.  Would  you  lessen  the  rate  of  one-eighth  of  one  per  cent, 
wipe  it  out  altogether?  A  I  would  not  wipe  it  out  altogether, 
cause  there  should  be  some  revenue  derived  from  it;  West 
rginia,  I  think,  charges  a  fifty  dollar  fee. 
Q.  Upon  the  filing  of  the  certificate  without  any  regard  to  the 
aount  of  the  capital  stock?  A.  That  is  what  I  understand  from 
e  counsel  that  drew  the  papers. 

Q.  You  believe  it  to  be  a  specific  sum?    A.  Yes,  sir;  it  was  a 
ecific  sum. 
Q.  Do  you  think  it  would  be  better  on  the  filing  of  the  articles 

charge  a  specific  sum  in  this  State?  A.  I  think  the  sum 
ght  to  be  graded  in  proportion  to  the  amount  of  capital  stock. 
Q.  Would  not  that  reach  just  the  same  result?  A.  Yes,  sir; 
would  reach  about  the  same  result  except  if  it  was  less  than  it 

at  present  why  more  corporations  would  be  formed. 

Q.  How  much  less  woul.I  you  make  it  if  you  had  your  way? 

That  is  a  subject  upon  which  I  have  not  reflected;  I  don't 
IOAV;   I   have   very   little   knowledge   of   the   amount   derived 
>m  it. 
Q.  One-eighth  of  one  per  cent  don't  seem  like  a  very  large  sum 


198 


to  charge,  does  it?    A.  No;  but  if  you  were  organizing  a  $3,000,00 
company  it  is  quite  a  little  item  of  expense  to  pay;  they  seem 
try  to  avoid  it  at  all  events. 

Q.  What  would  you  think  of  a  change  in  our  sitatutes  whic 
would   make   corporations   organized   under   the  laws  of   oth 
States,  doing  business  in  this  State,  liable  to  taxation,  inasmuc 
as  they  enjoy  the  privileges  of  doing  business  within  the  limits  ( 
this  State?    A.  I  think  that  some  statute  of  that  kind  should 
passed;  I  don't  see  any  good  reason  why  a  corporation  that  do 
business  and  is  protected  in  this  State  should  not  bear  its  shar 
of  the  burden,  but  of  course  in  taxing  that  form  of  property 
is  called  personal  we  always  have  to  bear  in  mind  the  fact  th 
it  will  escape  more  easily  than  real  estate,  and  every  man  will 
escape  taxes  if  he  can. 

Q.  What  is  your  opinion  generally  on  the  question  of  taxing 
personal  property?  A.  I  think  that  personal  property  should  bl 
taxed. 

Q.  Do  you  go  so  far  as  to  recommend  tihat  property  in  an  ore 
nary  business  ought  to  be  taxed?    A.  Hardly  that;  I  think  therj 
should  be  a  reasonable  exemption  of  personal  property;  a  certaiil 
amount  of  stock,  or  all  of  the  stock  of  a  firm  —  certain  stock  il 
business  might  be  exempted. 

Q.  Now,  to  give  an  illustration,  you  find  in  the  country  on| 
man  has  got  $10,000  invested  in  a  house  and  lot,  and  his  next  doof 
neighbor  has  got  $10,000  invested  in  business  —  we  will  assume  t 
good  paying  business  —  the  man  who  owns  real  estate  is  taxed  o* 
its  full  value;  the  man  who  has  $10,000  invested  in  business 
escapes  taxation  altogether;  what  do  you  say  to  the  proposition 
of  taxing  him?  A.  I  never  saw  any  reason  why  he  should  na 
be  taxed. 

Q.  Then  you  think  he  ought  to  be  taxed?    A.  Yes,  sir. 

By  Mr.  Gifford. 

Q.  Is  it  not  a  fact  that  this  $10,000  owned  by  the  one  in  personal 
property  earns  more  than  the  $10,000  owned  by  the  other  in  rest 
estate?  A.  I  think  it  is  so  now  if  the  testimony  of  farmers  is  $ 
be  believed. 


199 

By  the  Chairman. 

Q.  You  said  something  a  moment  ago  about  fixing  a  limit,  in 
stock.  A.  It  is  a  very  difficult  subject  to  say  what  the  limit,  should 
be;  I  have  really  no  opinion,  but  I  know  in  some  counties  —  I  can 
not  specify  any  particular  one,  but  we  receive  inquiries  all  over 
the  State  as  to  what  is  personal  property;  in  some  places  they 
seem  to  follow  the  practice  of  assessing  farm  stock  and  implements 
as  personal  property,  and  other  places  they  do  not,  and  in  some 
places  they  assess  stock  of  goods  in  stores  as  personal  property, 
and  in  other  places  it  is  not  done  at  all ;  there  ought  to  be  a  uni- 
form rule  in  respect  to  it;  and  the  statute  exempts  certain  goods 
from  execution,  and  it  exempts  the  property  purchased  by  pension 
moneys,  in  the  language  of  the  statute,  from  execution  and  from 
sale  for  taxes;  the  Court  of  Appeals  have  decided  that  that 
exemption  of  pension  moneys  carries  the  exemption  of  real  estate 
from  levy  and  sale  under  an  execution,  and  I  don't  see  any  reason 
why  the  principle  does  not  apply  to  exempt  it  from  taxes. 

Q.  What  do  you  say  about  the  proposition  about  taxing  bonds 
and  mortgages?  A.  I  think  they  ought  to  be  taxed. 

Q.  Did  you  take  into  consideration  the  question  of  the  real 
estate  being  assessed  its  full  value  without  repard  to  indebted- 
ness? A.  Yes,  sir;  I  know  tlhat  is  the  rule. 

Q.  You  would  tax  the  holder  of  the  fee  for  the  full  value  with- 
out regard  to  the  mortgage,  would  you?  A.  Yes,  sir. 

Q.  And  then  you  would  recommend  also  the  taxing  of  the 
holder  of  the  mortgage?  A.  Yes,  sir;  tax  it  as  personal  property. 

Q.  Would  or  not  that,  in  your  opinion,  be  double  taxation?  A. 
Well,  I  don't  think  it  would  operate  as  double  taxation  for  the 
holder  of  the  mortgage;  it  would  be  made  a  condition,  perhaps, 
of  the  loaning  of  the  money;  it  might  bear  as  double  taxation 
then  upon  the  individuals  who  own  the  property;  I  say  that  1. 
think  bonds  and  mortgages  ought  to  be  taxed  for  the  reason 
that  I  never  could  see  any  justice  in  making  the  holder  of  the  fee 
pay  a  tax  upon  the  whole  property  and  the  owner  of  the  bonds 
and  mortgages  escape  entirely. 


200 

Q.  I  think  you  said  that  you  were  in  favor  of  taxing  the  owner 
of  the  fee  without  regard  to  the  indebtedness?  A.  I  am,  unles 
you  continue  the  system  of  allowing  holders  of  personal  property 
to  swear  off  on  account  of  debts. 

Q.  I  am  dealing  now  entirely  with  the  question  of  real  estate 
are  you  in  favor  of  assessing  the  owner  of  the  fee  of  realty  without 
regard  to  whether  it  is  encumbered  or  not?    A.  I  think  that  is 
a  question  I  should  rather  reflect  on  a  little  before  I  gave  you  my 
opinion;  I  have  not  considered  it  very  much. 

Q.  You  say  that  to  tax  the  owner  of  the  fee  the  full  value,  and 
the  mortgage  as  well,  would  not  in  your  opinion  be  doubl< 
taxation?  Now  I  cite  an  instance:  A  house  and  lot  in  the  city 
of  New  York  is  assessed  for  f  50,000;  it  has  on  it  a  f 25,000  mort- 
gage which  pays  four  and  one-half  per  cent;  that  lot  and  building 
is  assessed  for  its  full  value,  and  the  rate  of  taxation  in  New  Yorl 
is  one  dollar  and  eighty-five  cents  per  hundred;  now,  if  you 
assessed  the  owner  of  the  mortgage  on  $25,000,  and  his  rate  is 
one  dollar  and  eighty-five  cents,  you  see  there  is  three  dollars 
and  seventy  cents  on  the  hundred,  so  that  there  is  not  mueJi  left 
of  the  rate  of  interest ;  now,  I  ask  you,  after  considering  it  in  that 
line,  whether  you  think  both  ought  to  be  taxed?  A.  I  don't 
know  that  I  do;  of  course,  the  taxing  of  the  bond  and  mortgage 
would  make  it  more  difficult  for  purchasers  of  real  estate  to  obtain 
loans  upon  real  estate,  and  it  is  to  the  advantage  of  the  real 
estate  owner  to  be  able  to  get  a  loan  readily  on  his  property. 

Q.  Do  you  think  that  loans  could  be  obtained  for  four  or  live  per 
cent  as  they  are  now,  if  the  holder  of  the  mortgage  was  assessed 
anywhere  from  one  dollar  and  eighty-five  cents  to  two  dollars  and 
twenty-five  cents?  A.  No;  they  could  not  be  obtained  as  readily, 
because  men  would  seek  investment  of  their  money  where  they 
did  not  have  to  pay  taxes;  perhaps  the  exemption  of  bonds  and 
mortgages  would  enable  holders  of  real  estate  to  borrow  money 
more  readily. 

Q.  Do  you  think  that  such  taxation  would  have  a  tendency  to 
drive  capital  out  of  the  State?  A.  I  think  it  would;  there  are 


201 

many  States  where  they  do  not  have  to  pay  taxes,  and  of  course 
every  holder  of  personal  property,  or  of  any  kind  of  property,  seeks 
to  evade  all  the  burden  that  he  can. 

Q.  The  last  two  Legislatures  have  considered  the  question  of 
reducing  the  legal  rate  of  interest  from  six  to  five  per  cent;  the 
same  question  will  probably  be  discussed  by  the  Legislature  of 
1893 ;  now,  what  do  you  think  the  effect  would  be  of  passing  two 
bills,  one  reducing  the  legal  rate  of  interest  from  six  to  five,  and 
the  other  taxing  bonds  and  mortgages?  A.  It  would  make  it 
more  difficult  to  obtain  loans  on  real  estate. 

Q.  Would  you  recommend  the  adoption  of  both  propositions? 
A.  Speaking  hastily,  I  do  not  think  I  would. 

Q.  Would  you  recommend  either  one?  A.  I  do  not  think  I 
should  recommend  either  one  at  present;  no. 

Q.  Do  you  think  there  would  be  any  direct  relief  to  the  farmer 
by  the  reduction  of  the  rate  of  interest  from  six  to  five  per  cent? 
A.  Hardly  so;  because,  as  a  matter  of  fact,  to  borrow  money  you 
could  get  all  you  want  at  present  on  good  farm  lands  at  five  per 
cent ;  it  is  not  necessary  to  pass  a  statute  for  that. 

Q.  That  applies  to  the  country  district?  A.  Yes,  sir;  so  far  as 
my  experience  extends. 

By  Mr.  Gifford. 

Q.  Then  why  would  it  do  any  harm  to  reduce  the  legal  rate? 
A.  I  do  not  know  that  it  would  do  any  harm  except  that  there  are 
kinds  of  loans  where  the  risk  is  greater  that  perhaps  a  person  loan- 
ing the  money  should  have  a  larger  percentage;  it  is  only  on 
good  loans  —  I  am  not  much  of  a  believer  in  the  doctrine  of  con- 
trolling the  rate  of  interest  by  statute;  I  think  the  supply  and 
demand  does. 

By  Mr.  Guenther. 

Q.  Now,  in  the  event  of  reducing  the  legal  rate  of  interest  from 
«ix  to  five  per  cent,  or  in  the  event  of  taxing  bonds  and  mortgages, 
who  would  be  the  sufferer,  the  loaner  of  the  money  or  the 
borrower?  A.  The  borrower;  he  always  has  to  suffer. 


202 

By  the  Chairman. 

Q.  The  first  purpose  of  this  inquiry  I  will  read  to  you:  As  to 
propriety  of  modifying  the  present  laws  relating  to  taxation,  as? 
ment  and  interests,  so  far  as  they  affect  the  agricultural,  manufa 
turing,  commercial,  labor,  banking  and  other  interests  of 
State;  can  you  suggest  any  modification  of  the  existing  laws 
would  give  relief  to  either  of  the  interests  I  have  enumerated? 
A.  The  principal  suggestion  I  have  is  that  one  that  was  embodied 
in  what  I  said  before,  the  repeal  of  the  exemption  by  debts  on 
personal  property  so  as  to  reach  more  effectively  the  personal 
property  of  the  State;  I  believe  the  changes  in  tax  laws  should 
made  very  carefully  and  slowly;  you  can  not  tell  what  the  effec 
of  the  statute  is  very  well  until  you  have  had  a  year  or  two  experi- 
ence in  its  operation;  I  am  opposed  to  radical  changes. 

Q.  Without  qualification,  you  recommend  the  modification 
the  existing  law  so  as  to  prevent  any  offset  by  indebtedness  o 
the  taxation  on  personal  property?    A.  Yes,  sir;  I  think  you  will 
reach  more  personal  property  if  you  do  that. 

By  Mr.  Guenther. 

Q.. Would  you  also  recommend  a  revision  of  the  tax  for  the 
purpose  of  incorporation?  A.  I  can  hardly  say  that  I  would 
recommend  that;  my  notion  is  that  the  State  does  not  derive  any 
additional  revenue,  but  my  opinion  is  very  limited  on  that  subject; 
I  do  not  know  what  revenue  they  get;  the  Comptroller  or  some 
of  those  officials  in  Albany  would  know  better  about  that. 

John  Connolly,  called  as  a  witness,  being  duly  sworn,  testified  as 
follows : 

By  Mr.  Creamer. 

Q.  You  were  a  member  of  the  Legislature  last  year  and  some 
years  past,  I  believe?  A.  Yes,  sir. 

Q.  And  you  introduced  a  bill  on  the  question  of  taxation;  will 
you  please  state  to  the  committee  what  it  was?  A.  I  introduced 
two  bills;  the  one  which  has  attracted  the  most  attention  is  tlie  one 
known  as  the  local  option  bill,  which  I  will  first  speak  of,  if  yon 
wish. 


203 

Q.  Explain  to  the  committee  the  provisions  of  the  bill?  A. 
The  local  option  bill  provided  that  for  local  purposes  the  question 
of  taxation  be  left  to  the  counties  —  all  of  the  counties  of  the 
State,  the  board  of  supervisors  there  to  have  the  power  to  adjust 
taxes  as  in  their  judgment  they  deemed  best,  not  interfering  with 
the  quota  that  each  county  was  obliged  to  pay  for  the  maintenance 
of  the  State  government;  the  purpose  sought  by  that  bill  was  that 
in  the  larger  cities  the  vexed  question  of  what  class  or  classes 
of  property  should  pay,  or  what  class  or  classes  should  be  exempt  — 
that  the  sentiment  of  the  various  localities  would  govern  the 
question,  by  the  board  of  aldermen  in  cities  and  the  board  of 
supervisors  in  the  counties;  for  instance,  New  York  city,  if  in 
the  judgment  of  the  board  of  aldermen,  whose  judgment  would  be 
governed  by  public  opinion,  and  the  advice  of  the  tax  commission- 
ers and  the  sinking  fund  commissioners,  it  were  deemed  advisable 
to  abolish  taxes  on  personal  property,  and  oblige  real  estate  to 
bear  all  the  burden  that  would  be  in  the  interest  of  the  people 
by  relieving  personal  property,  it  would  attract  capital  that  is 
not  now  invested;  and,  furthermore,  it  would  prevent  that  lying 
and  cheating  that  is  going  on  and  which  it  is  impossible  to 
prevent. 

Q.  Wherein  does  that  differ  from  the  present  law;  will  you 
pleaste  explain  what  amendments  you  make?  A.  Under  the 
present  law  nothing  but  chaos  exists,  in  my  judgment;  for 
instance,  the  tax  commissioners  now  have  the  right  to  tax  per- 
sonal property  and  other  k'nds  of  property  that  they  see  fit. 

Q.  Under  the  law?  A.  \>g,  sir;  but  the  difficulty  they  have  in 
getting  at  it  permits  personal  property  to  escape  and  the  timidity 
of  capital  injures  the  city  and  prevents  capital  being  invested 
here. 

Q.  What  do  you  propose  to  do  to  bring  order  out  of  this  chaos? 
A.  I  propose  to  leave  to  the  board  of  aldermen,  which  under  the 
circumstances  is  the  board  of  supervisors  in  counties,  the  power 
of  ascertaining  what  class  of  property  should  bear  the  taxes. 

Q.  By   instructing   the   tax   commissioners?    A.  Yes,    sir;    I 
believe  in  Mr.  Feitner's  suggestion,  which  I  wanted  to  incorpo- 


204 

rate  in  my  bill,  and  that  is  that  the  tax  commissioners  and  the 
sinking  fund  provide  a  coda  —  if  the  tax  commissioners  and  the 
sinking  fund  commissioners  have  the  power  to  get  up  a  code  and 
get  a  concensus  of  views  of  all  interests  they  could  then  readily 
get  at  how  to  apportion  and  distribute  the  burden  of  expense 
of  government. 

Q.  You  might  give  some  power  to  the  board  of  apportionment? 
A.  That  would  have  to  be  submitted  to  the  board  of  aldermen 
in  the  city  or  the  supervisors  in  the  country  localities. 

By  Mr.  Guenther. 

Q.  If  such  a  precaution  was  necessary  for  New  York  county 
why  should  not  it  be -necessary  for  the  different  counties  of  the 
State?  A.  Have  the  mayor  or  the  president  of  the  village 
designate  some  officers  who  should  submit  to  the  board  of  super- 
visors some  such  code,  and  that  would  be  governed  largely  by 
sentiment;  take  the  county  of  Westchester;  there  are  many 
towns  in  Westchester  well  adapted  for  manufacturing  purposes; 
suppose  the  board  of  supervisors  there  had  the  power  to  say 
that  a  meeting  for  a  concensus  of  views  should  be  had;  that  it 
would  be  a  good  thing  to  abolish  taxes  on  personal  property,  the 
effect  would  be  it  would  attract  capital  to  Westchester  county 
for  manufacturing  purposes  that  would  enhance  the  value  of  real 
estate  because  the  value  is  regulated  by  the  demand  for  it,  and 
as  soon  as  you  attract  capital  you  enhance  the  value  of  real 
estate  —  enhance  its  value  and  it  can  pay  readily  and  increase 
its  taxation;  this  city  if  real  estate  had  to  bear  all  the  expenses 
of  government  it  would  only  increase  the  total  amount  about  five 
per  cent,  but  still  the  tax  commissioners  under  my  bill  would 
have  the  power  under  a  code  to  be  submitted  to  the  board  of 
aldermen  to  compel  corporations  to  pay  a  share,  if  public  opinion 
thought  it  would  be  for  the  best  interests  of  the  people. 

Q.  Did  your  bill  propose  to  amend  the  Constitution?  A.  You 
would  not  have  to  amend  the  Constitution  to  provide  that 
because  the  code  would  provide  subject  to  the  approval  or  dis- 
approval of  the  board  of  aldermen. 


205 

Q.  Does  it  prevent  a  subsequent  Legislature  from  affecting 
your  code?  A.  The  tax  commissioners  in  cities  and  the  sinking 
fund  commissioners  and  the  board  of  apportionment;  the  bill 
could  provide  that  they  prepare  a  code  of  taxation  regulating 
and  apportioning  the  respective  portions  of  real  estate  and  per- 
sonal property  that  corporations  should  pay,  subject  to  the 
approval  or  disapproval  of  the  board  of  aldermen  and  which 
would  not  violate  the  spirit  of  the  Constitution. 

Q.  The  original  law  of  the  State  was  uniform  concerning  all 
counties  of  the  State;  that  uniformity  was  in  existence  here 
many  years  ago  until  special  exemptions  wrere  made  to  particu- 
lar interests  in  different  counties,  more  particularly  in  the  metro- 
politan counties;  how  did  you  provide  against  that?  A.  By 
having  the  bill  applied  generally. 

Q.  The  original  tax  laws  of  this  State  applied  generally?  A. 
We  never  had  a  system  in  this  State,  and  with  the  exception 
of  Pennsylvania,  where  the  expense  of  the  State  government  is 
defrayed  entirely  by  taxes  on  corporations,  we  never  had  such  a 
system  as  we  would  have  under  this  bill. 

Q.  What  your  bill  would  get  at  would  be  to  allow  each  county 
to  decide  for  itself  as  to  the  assessing  of  personal  property  or 
noiiassessing?  A.  That  is  it  exactly. 

Q.  If  the  people  in  the  different  counties  saw  fit  to  exempt 
it,  they  could  have  the  privilege  to  do  it?  A.  Yes,  sir. 

Q.  That  is  the  marrow  of  the  bill  you  proposed  and  that  is 
known  as  the  Local  Option  Tax  Bill?  A.  Yes,  sir. 

Q.  Still,  if  there  is  a  special  act  exempting  corporations  from 
taxation  those  laws  would  have  to  be  repealed  as  well,  or  else 
this  local  option  bill  would  not  affect  them?  A.  Yes,  sir. 

Q.  In  case  there  is  a  uniform  system  of  taxation  aimed  at, 
would  not  that  largely  lead  up  to  a  constitutional  amendment? 
A.  My  judgment  is  that  the  inheritance  tax  is  becoming  so 
great  and  from  other  sources  from  which  taxes  are  raised  for 
the  maintenance  of  the  State  government,  that  it  will  be  seen 
that  the  State  assessors  will  have  very  little  to  do  as  to  appor- 
tioning for  State  purposes  taxes  on  real  estate. 

Q.  What  is  the  tax  for  State  purposes?  A.  New  York  city 
pays  forty-five  per  cent  of  the  entire  tax  for  this  year. 


206 

Q.  Can  you  inform  us  what  the  cause  of  the  increase  of  the 
allotment  to  New  York  was?  A.  I  think  it  was  a  falling  off 
of  what  was  supposed  to  be  the  inheritance  tax  which  did  not 
realize  so  much;  Mr.  Wood,  I  think,  is  more  familiar  in  that 
respect  than  I  am  myself;  of  course,  we  always  have  to  pay 
more  than  our  share  in  New  York;  though  we  pay  forty-five  per 
cent  of  the  State  tax,  we  do  not  represent  forty-five  per  cent 
of  the  real  estate  valuation;  I  do  not  think  we  represent  over 
thirty-five  per  cent  and  the  other  thirty-five  per  cent  we  give 
for  the  benefit  of  the  country;  we  are  rather  philanthropic. 

By  Mr.  Guenther. 

Q.  By  referring  to  the  bill  you  introduced,  is  it  not  your  opinion 
that  the  ultimate  object  of  that  bill  was  to  exempt  entirely  per- 
sonal property  from  taxation?  A.  No,  sir;  I  do  not  think  so. 

By  Mr.  Gifford. 

Q.  Do  you  not  think  that  if  the  cities  under  that  law  were  granted 
the  right  and  saw  fit  to  exempt  personal  property  that  it  would 
have  an  effect  to  bring  about  the  same  exemption  in  rural  counties 
adjoining  cities?  A.  They  have  their  own  interests  to  serve 
and  would  be  governed  by  their  interests;  if  it  was  for  their 
interest  to  exempt  personal  property  they  would  know  what  to 
say. 

Q.  I  think  you  said  in  your  former  testimony  that  the  attrac- 
tion of  capital  to  any  locality  enhanced  the  value  of  property 
in  that  locality?  A.  Yes,  sir. 

Q.  Now,  suppose  we  pass  this  law  which  brings  about  a  with- 
drawal of  capital,  as  I  apprehend  it  would  from  the  rural  dis- 
tricts, what  effect  would  that  have;  would  that  appreciate  or 
depreciate  .the  value  there?  A.  I  believe  that  the  supervisors 
in  each  county  would  be  governed  entirely  by  what  would  be 
for  their  best  interests  and  could  have  a  system  for  their  best 
interests  and  much  better  than  the  present  system. 

Q.  But,  suppose  that  any  one  of  these  outlying  counties  would 
have  a  number  of  capitalists  who  were  escaping  taxation  —  who 
desired  to  escape  taxation  on  personal  property  —  and  they  know 


207 

that  the  effect  of  this  Local  Option  bill  is  to  exempt  it  in  the 
cities,  what  will  be  their  position  towards  the  board  of  super- 
visors in  making  up  their  basis  of  taxation;  would  it  not  be 
natural  for  them  to  say:  "Now,  you  must  follows  suit  and  tax 
upon  the  same  basis  that  the  city  does,  or  we  will  withdraw  our 
capital  and  invest  in  New  York,  Buffalo  or  Syracuse,  or  in  any 
city  where  there  is  exemptions?"  A.  That  will  be  regulated 
this  way;  suppose  John  Jones  in  your  county  should  appeal  to 
the  board  of  supervisors  where  they  are  severe  on  him  and  say 
that  unless  they  let  up  he  would  move  to  an  adjoining  county 
where  personal  property  was  exempt  so  that  you  would  be  com- 
pelled to  adopt  a  different  system;  the  people  always,  if  left  to 
themselves,  do  what  is  for  their  best  interests;  I  find  that  while 
the  Legislature  at  Albany  are  in  the  main  governed  by  good 
principles,  yet,  if  the  localities  had  something  to  say  in  the  gov- 
ernment of  themselves,  they  would  be  much  better  governed. 

Q.  You  call  this  local  option,  but  if  the  action  of  the  city 
brought  about  this  result,  and  forced  the  boards  of  supervisors 
in  the  rural  counties  to  adopt  the  same  basis,  would  it  amount 
to  local  option;  does  it  not  amount  to  the  rule  of  the  cities  over 
the  counties?  A.  No,  sir;  how  could  this  city  rule  the  board  of 
supervisors  of  Chautauqua  county? 

Q.In  this  way,  our  capitalists  would  say:  "Unless  you  fix  on 
the  same  basis  that  they  have  in  Buffalo  and  New  York,  we  will 
withdraw  our  capital  and  invest  it  there;"  what  recourse  have 
we?  A.  You  would  have  the  recourse  of  acting  as  it  was  best 
for  your  interests. 

Q.  The  final  result  then  would  be  to  release  and  exempt  all 
personal  property  throughout  the  State  in  a  few  years?  A.  Not 
at  all. 

By  Mr.  Creamer. 

Q.  What  was  the  result  of  the  introduction  of  your  bill?  A. 
Lake  all  good  measures,  when  first  introduced  it  met  with  tem- 
porary defeat. 


208 

Q.  In  the  committee  of  the  whole?    A.  No,  sir;  I  succo^ded 
in  getting  it  before  the  House;  there  is  no  committee  of 
whole  under  the  new  rules. 

Q.  Did  it  pass  the  Assembly?    A.  No,  sir. 

Q.  Was  there  a  vote  taken?    A.  No,  sir;  I  believe  though  t] 
with  the  coming  Legislature,  with  the  increase  that  the  citi< 
have,  and  in  view  of  the  fact  that  the  minds  of  the  rural  legis- 
lators are  being  disabused  as  to  the  effects  of  this  bill  throuj 
education,  that  it  stands  an  excellent  chance  of  becoming  a  law 
the  next  session. 

Q.  Did  it  clear  the  way  of  those  exemptions?    A.  No,  sir;  Ih 
would  be  left  to  the  local  authorities. 

Q.  It  left  them  a  clear  field  to  exempt  whom  they  saw  fit  in  the 
respective  counties?    A.  Yes,  sir. 

Q.  It  supplanted  all  other  legislation  on  that  subject?    A.  Y 
sir. 

By  Mr.  Gruenther. 

Q.  Are  the  single  tax  people  opposed  to  or  in  favor  of  yoi 
bill?    A.  I  can  not  say  positively;  I  think  some  of  them  were. 

Q.  Opposed  to  it?  A.  I  can  not  say  positively  that  they  were 
unanimous  for  it;  Mr.  Shearman  favored  it;  I  do  not  know  whether 
the  single  tax  people  were  unanimous  in  regard  to  it  or  not. 

Q.  Who  drew  the  bill?  A.  Mr.  Hall  of  New  York,  Mr.  Shear- 
man and  Mr.  Claflin  —  John  Claflin  —  they  were  instr  amenta! 
in  preparing  the  bill;  it  was  favored  by  the  New  York  press 
unanimously;  I  recollect  very  well  that  the  Times  had  a  number 
of  editorials,  and  the  Advertiser  and  other  papers  strongly  urging 
the  bill. 

Q.  Isn't  Mr.  Hall  one  of  the  principal  advocates  of  this  single 
tax  theory;  has  he  not  written  a  book  on  the  subject  of  single 
tax;  have  you  seen  a  copy  of  such  a  book?  A.  I  believe  he  is- 
a  very  well  informed  man  of  some  literary  reputation;  what  sub- 
jects he  has  written  on  I  do  not  know. 


209 

John  D.  Ellis,  called  as  i  witness,  being  duly  sworn,  testified 
is  follows: 

By  Mr.  Creamer. 

Q.  You  can  enlighten  the  committee  on  this  question  of  taxa- 
ioii  from  your  experience;  have  you  read  the  resolution  in 
•elation  to  the  creation  of  this  committee?  A.  Yes,  sir. 

Q.  As  to  recent  legislation,  has  it  been  the  cause  of  driving 
apital  from  the  State;  have  you  any  knowledge  on  that  subject? 
4..  Well,  the  work  of  the  State  Assessors,  of  course,  so  far  as 
hey  judicially  work,  they  have  no  jurisdiction  except  to  equal i/c 
he  realty;  they  have  nothing  to  do  with  personal  property,  so 
hat  in  the  official  work  of  +he  State  Board  of  Equalization  tln-y 
ire  called  assessors,  but  aiv  a  board  of  equalizers. 

Q.  What  has  your  observation  been  concerning  personal  prop 
»rty  generally,  not  in  connection  with  your  duty,  but  information 
ivhich  you  must  necessarily  acquire  in  dealing  with  the  subject  ? 
\.  I  will  give  you  my  obser/ation  and  the  opinion  I  have  formed 
ipon  the  general  methods  of  assessment  and  taxation,  and  then 

will  answer  any  questions;  if  I  were  drafting  a  bill  I  would  first 
issess  property  where  it  is  located,  realty  and  personal  property 
dike  —  the  property  wherever  it  is;  for  instance,  a  stock  of  goods 
n  Jefferson  county;  I  would  assess  that  property  as  I  do  the 
ealty  there  without  regard  to  the  ownership  —  where  the  prop- 
>rty  exists;  so  in  the  city  of  New  York  I  would  assesvS  all  stocks 
>f  goods;  if  the  owner  chose  to  reside  in  Westchester  let  him  do 
t,  but  I  would  assess  it  where  the  city  has  got  to  protect  it, 
vithout  regard  to  where  the  offices  are;  I  would  assess  it  whriv 
t  is  protected. 

Q.  Would  you  assess  the  citizen?  A.  Whether  the  owner  of 
he  property  resides  in  some  other  county  or  outside  of  the  State; 

would  assess  it  where  the  property  has  the  protection. 

Q.  Then  you  would  not  follow  the  Massachusetts  law  and 
issess  a  citizen  or  resident  outside  the  State  limit?  A.  I  would 
issess  that  property  in  the  county  where  it  is  protected. 

Q.  Outside  of  the  count  7?  A.  Without  regard  to  his  being 
mteide  of  the  State. 

27 


210 


Q.  The  property  not  in  the  State?    A.  I  mean  the  property j 
being  in  the  State. 

Q.  You  would  not  assess  a  resident  unless  the  property 
within  the   State?    A.  I  think  we  would  reach   a  very  mi 
larger  per  cent  of  personal  property,  to  reverse  it  and  assess 
property  where  it  is  located;  I  am  not  talking  about  evidences  ol 
debt;  I  am  talking  about  property  that  is  property. 

Q.  Evidently  you  have  not  given  this  Massachusetts  law 
thought,  because  otherwise  you  would  see  the  purpose  of  the 
question,  which  is  this;  a  citizen  residing  in  the  State  and  having 
property  in  Connecticut,  you  would  assess  that  citizen  on  hii 
property  no  matter  where  it  was  located?  A.  I  do  not  think  yoi 
understand  me. 

Q.  Suppose  you  are  a  resident  of  this  State,  Jefferson  counb 
you  are  interested  in  property  in  Connecticut;  would  you  in  ma 
ing  a  return  for  personal  taxes  when  you  were  asked  what  yi 
were  worth  in  personalty,  would  you  include  your  property  oui 
side  of  the  State;  would  you  enforce  a  law  that  would  includ< 
such  property?  A.  I  would  let  that  property  if  it  is  in  Conm 
cut  pay  its  taxes  there. 

Q.  Suppose  in  Connecticut  that  the  return  is  that  the  citis 
makes  a  return  in  Jefferson  county  and  therefore  is  exempt? 
The  difficulty  is  that  class  of  property,  nine-tenth  of  it,  does 
pay  anywhere. 

Q.  Would  you  follow  the  citizen  or  the  property?    A.  I  w< 
assess  the  property  where  it  is,  not  the  citizen. 

By  Mr.  Guenther. 

Q.  Suppose  it  is  a  line  of  steamers  that  do  traffic  on  the  lake 
A.  That  you  have  got  to  assess  as  corporations;  I  am  talkii 
about  property  that  has  a  legal  existence. 

Q.  Suppose  a  corporation  has  its  main  office  in  a  small  toi 
outside  of  the  State  and  it  has  all  the  protection  of  fire  and  poJ 
from  that  State  what  would  you  do?    A.  For  instance,  you 
got  H.  BJ  Claflin;  '-if  they  have  a  half  dozen  stores  in  diff* 


wherever  the  property  is,  not  in  New  York; 

TS 


211 

ties  of  the  State;  when  we  hare  been  talking  with  local  assessors 
nany  times  we  find  here  is  a  very  large  corporation  or  a  very 
nrgo  business  and  we  ask  why  is  not  that  found  on  the  assess- 
IUM )l>roll;  well,  the  owners  have  an  office  in  New  York  or  Boston 
Philadelphia,  and  all  that  property  goes  soot  free  from  taxation 
n  consequence. 

By  Mr.  Creamer. 

Q.  The  law  allows  you  to  tax  it  as  non-resident  property;  if  it 
s  I  here  in  Jefferson  county  can  not  the  assessors  assess  it  in 
Jefferson  county?  A.  They  do  not  do  it;  I  am  talking  about 
>oL'sonal  property. 

Q.  Personal  property  as  well?     A.  No,  sir. 

Q.  Even  a  stock  of  goods?    A.  No,  sir;  the  law  says  you  assess 

Tsoual  property  wherever  the  owner  resides;  I  live  in  Jefferson 
ounty;  if  I  am  doing  business  in  the  city  of  New  York  and  have 
|100,000  in  ^oods  here  you  can  not  assess  me  here;  you  have 
;oi,  <<>  assess  n  IP  in  Jefferson  county;  now,  I  would  change  that; 

would  assess  that  property  in  the  county  that  protects  that 
property  —  in  the  county  where  the  business  is  done. 

By  Mr.  Gruenther. 

Q.  Is  not  that  the  law  now?    A.  No,  sir. 

Q.  Did  not  the  revision  of  the  corporation  laws  last  year  make 

provision  to  that  effect?  A.  I  am  not  talking  about  corpora- 
ions  now;  I  am  talking  about  individuals,  partnerships. 

Q.  It  seems  to  me  that  the  property  we  have  referred  to  in 
IK.-  first  instance  is  clearly  assessable  in  Jefferson  county  unless 
hero  is  an  office  somewhere  else.  A.  I  would  do  away  with  that 
llico;  that  is  what  the  dodge  has  been,  and  the  assessors  there 
io  not  know  anything  of  the  existence  of  the  business. 

By  Mr.  Ahearn. 

Q.  Suppose  that  man  manufactured  goods  up  there  and  they 
vrere  then  delivered  to  the  principal  office  in  this  city,  how  would 
rou  tax  him?  A.  I  would  assess  the  average  amount  of  goods 
here. 


212. 

Q.  In  both,  counties?    A.  Not  necessarily. 

Q.  Suppose  as  soon  as  they  were  manufactured  they 
brought  here,  how  would  you  get  to  that?  A.  Here  is  a  con< 
we  will  say,  manufacturing  goods  at  Watertown,  and  they  averi 
about  $20,000  worth  of  stock  a  year,  or  around  that  —  aver* 
$20,000  a  year  and  have  their  office  here;  I  would  assess  that; 
if  there  is  a  riot  in  Jefferson  county  and  that  property  is  burned 
up,  Jefferson  has  to  pay  for  it,  then  why  not  receive  the 
of  taxation? 

By  Mr.  Guenther. 

Q.  Do  you  believe  in  taxing  bonds  and  mortgages?     A.  I 
very  much  in  favor  of  taxing  property. 

Q.  Both  personal  and  real?    A.  Yes,  sir;  property. 

Q.  Do  you  believe  in  taxing  bonds  and  mortgages?  A.  I  woi 
not  say  about  that. 

Q.  What  is  your  idea  about  reducing  the  legal  rate  of  interc 
from  six  to  five  per  cent?  A.  I  am  not;  in  favor  of  it;  I  think 
would  drive  capital  out  of  the  State. 

By  Mr.  Gifford. 

Q.  Do  you  not  consider  bonds  and  mortgages  property;  y< 
say  you  are  in  favor  of  assessing  property?  A.  I  have  always 
favored  assessing  mortgages,  but  I  am  somewhat  doubtful  as  tJ 
the  amount;  we  get  so  little  of  that  it  has  been  a  query  to  mJ 
whether  the  rate  of  interest  would  be  cheaper;  I  don't  think  one! 
twentieth  of  them  is  ever  reached. 

Q.  Your  opinion  is  that  if  the  legal  rate  of  interest  were  reduceJ 
from  six  to  five  per  cent,  and  a  tax  put  upon  mortgages,  that  the 
borrower  would  have  to  stand  the  burden  of  that  taxation?  ^U 
Yes,  sir;  I  think  so;  I  am  positively  in  favor  of  making  som& 
exemptions  for  debts  upon  realty  that  we  have  now  on  personal^ 
property,  or  else  I  would  do  away  with  the  exemption  of  debtft 
in  both  cases,  which  I  think  would  be  still  better;  I  would  ta»| 
property  with  no  exemptions,  the  personal  property  the  same  asJ 
we  do  now  the  real  estate,  making  no  exemptions  for  debts. 


213 

By  Mr.  Creamer. 

Q.  Do  you  favor  the  taxing  of  personal  property?  A.  All  prop- 
erty that  is  property,  without  now  having  reference  to  evidences 
>f  debt 

Q.  Do  you  favor  continuing  the  deduction  from  personal  as 
the  law  is  now  unless  it  is  deducted  as  well  from  real  estate? 
..  I  would  give  the  same  exemption  to  each  class. 

Q.  Or  otherwise  repeal  the  exemption  for  personal  property? 
..  Yes,  sir;  I  think  there  is  no  justice  in  that;  you  have  $10,000 
u  mortgage  and  your  neighbor  has  $10,000  on  a  farm;  he  Is  not 
exempt  on  his  debts  though  he  may  owe  three-quarters  of  it, 
but  you  come  in  for  exemption  so  that  you  pay  one-quarter  of 
;he  tax. 

Q.  As  regards  taxing  mortgages,  what  is  your  judgment?  A.  I 
lave  felt  that  unless  there  is  some  way  to  reach  them  so  that  it 
?an  be  collected  would  be  better  not  to  tax  them. 

Q.  Has  the  effort  generally  been  made  to  reach  them?  A.  The 
issessors  claim  so. 

Q.  What  is  your  opinion?     A.  I  think  ill  many  cases  they  are 

jry  diligent. 

By  Mr.  (jueuther. 

Q.  Is  it  not  the  most  simple  matter  in  the  world  to  go  to  the 
•egister's  office  or  county  .clerk's  office  and  ascertain  the  amount 
>f  mortgages  on  record?  A.  Yes,  sir;  you  loan  $10,000  and  you 
lave  a  mortgage  made,  some  party  in  New  Jersey,  the  moment 
t  is  recorded  you  take  an  assignment  of  it. 

Q.  Would  you  amend  the  law  by  compelling  him  to  pay  a  tax 
it  the  time  it  is  left  for  record?  '  A.  If  you  make  it  so  that  it  can 

i  reached  I  say  amend  it,  but  not  as  it  is  now. 

Q.  If  you  could  amend  the  law  so  as  to  tax  bonds  and  mortgages 
rou  would  favor  it?  A.  Yes,  sir. 

Q.  Who  would  ultimately  pay  that  tax,  the  borrower  or  the 
ender?  A.  Without  regard  to  that,  that  is  a  theory  that  the 
people  would  differ  about;  if  there  is  any  way  of  reaching  inort- 


gage  so  that  a  large  percentage  of  them  were  taxed  I  would  be 
in  favor  of  taxing  them. 

Q.  Taxing  the  mortgages?     A.  Yes,  sir. 

Q.  Supposing  I  come  to  you  and  wanted  to  borrow  $5,000 
there  is  a  tax  on  that  of  say  ten  dollars,  before  you  would  give 
that  money  wouldn't  you  have  some  arrangement  made  with  your 
attorney  to  have  that  money  paid  as  attorney  fees  or  some  way 
before  you  advanced  the  money  to  me?  A.  That  might  be  (»oi 
in  some  cases. 

By  Mr.  Gifford. 

Q.  Would  that  depend  largely  upon  the  question  of  supply  and 
demand  in  money?    A.  Doubtless,  it  would. 

Q.  Have  you  any  apprehension  it  would  have  the  effect  of  makij 
the  borrower  pay  any  more;  if  it  was  generally  understood  that  a 
parties  must  follow  the  same  rule  and  we  are  to  put  taxes  upon  tl 
mortgages,  do  you  not  suppose  there  would  be  just  as  many  inoi 
gages  accepted  as  there  are  at  the  present  time?  A.  As  a  bor- 
rower, I  would  take  my  chances. 

Q.  As  an  attorney,  would  you  not  include  the  amount  of  that 
in  the  disbursements,  such  as  making  a  search,  and  so  forth?    A. 
That  would  be  the  case,  doubtless,  if  money  was  very  close: 
would  make  the  board  of  supervisors  a  board  of  equalization  t<. 
personal  property  as  well  as  realty;  there  is  always  a  very  gr< 
injustice  between  the  counties;  for  instance,  in  Albany  counl 
banks  are  assessed  on  personal  property  at  100  per  cent;  and 
Oneida  county  they  are  assessed  at  fifty,  and  in  consequence  th< 
banks  are  paying  on  the  same  surplus  twice  the  amount  they  are 
Oneida  county  because  the  board  £aii  not  equalize. 

By  Mr.  Creamer. 

Q.  As  regards  the  listing  system  I  see  you  recommend  it  in 
report  to  the  Legislature?    A.  Yes,  sir;  two  years  ago. 

Q.  Was  any  action  taken  subsequently  in  relation  to  it? 
No,  sir;  nothing  was  done. 


215 

Q.  No  vote  taken?  A.  Our  board  recommended  it  —  the 
oard  of  State  Assessors. 

Q.  What  system  did  you  recommend;  that  in  vogue  in  any 
ther  States?  A.  In  Pennsylvania,  Massachusetts  and  Ohio. 

Q.  Ohio  as  well?    A.  Yes,  sir. 

Q.  How  has  it  operated?  A.  They  claim  that  the  law  has 
roven  satisfactory,  and  that  there  is  a  very  much  larger  per- 
mtage  of  personal  property  on  the  assessment-roll. 

Q.  The  system  is  old  in  Massachusetts;  it  is  more  recent  in 
ther  Stated?  A.  In  Massachusetts  the  personal  property  is 
bout  forty  per  cent  of  all;  in  the  State  of  New  York  it  is  about 
in. 

Q.  How  as  regards  Pennsylvania?  A.  In  Pennsylvania  it  is 
hirty-eight  per  cent. 

Q.  In  Ohio?    A.  Forty-two  per  cent,  I  think. 

Q.  Higher  in  Ohio  than  elsewhere?    A.  A  fraction. 

Q.  Illinois  has  it?  A.  I  think  so,  and  Indiana;  I  think  they 
ave  the  listing  system  now  in  a  majority  of  the  northern 
tates. 

Q.  What  is  the  system  in  Connecticut?  A.  They  have  a 
isting  system  there  also. 

Q.  Do  you  know  the  percentage  there?  A.  The  percentage 
lere  is  about  forty-two  per  cent. 

Q.  Then  evidently  there  is  no  danger  of  property  escaping  from 

is  State  to  those  States?  A.  The  tax  commissioners  in  those 
tates  say  it  has  not  operated  that  way;  they  are  not  conscious 
:  having  lost  anything  in  consequence  of  it. 

Q.  What  is  the  law  in  "New  Jersey?  A.  I  am  not  certain 
bout  it. 

Q.  Not  a  listing  law?  A.  I  think  not;  we  corresponded  with 
lie  tax  commissioners  of  some  eight  or  ten  States,  and,  in 
\  ery  instance,  they  claimed  that  the  effect  had  been  to  increase 
le  amount  of  personal  property. 

Q.  In  those  States  there  does  not  seem  to  be  the  difficulty  we 
ave  here?  A.  No,  sir;  they  say  not;  they  think  that  no  such 
rouble  as  that  would  occur  here. 


216 

Q.  They  demonstrate  it  ie  possible  to  enforce  the  tax  law? 
A.  Yes,  sir. 

Q.  And  in  this  State  it  is 'ten  per  cent  while  in  other  States 
it  is  as  high  as  forty-two  per  cent?  A.  Yes,  sir. 

Q.  Da  you  remember  how  stringent  was  this  listing  system 
proposed  by  the  bill  your  board  recommended;  was  it  as  inquisi- 
torial as  it  is  generally  believed  in  its  features  as  regards  persoi 
rights?  A.  That  is  not  the  complaint  where  it  is  in  effect;  the 
is  no  complaint  of  that  kind. 

Q.  It  is  simply  a  blank  sent  out  to  each  individual?    A.  Y< 
sir;  they  list  their  own  property. 

Q.  Explain  that?  A.  Each  individual  taxpayer  is  furnishc 
with  a  blank  classifying  different  classes  of  property;  if  a  farm< 
he  puts  the  number  of  cows,  horses,  sheep  and  his  farming 
dairy  tools;  if  a  merchant  he  classifies  his  goods;  if  a  broker  o:c 
any  individual-  if  he  has  bonds,  mortgages,  notes  and  accounts, 
he  puts  them  into  the  inventory. 

Q.  With  an  affidavit?  A.  Yes,  sir;  it  has  to  be  sworn  to  in  all 
cases. 

Q.  Before  a  notary  public?  A.  Or  some  person  authorized  to 
administer  an  oath. 

Q.  And  that  is  returned  to  the  tax  office?    A.  Yes,  sir. 

Q.  By  mail?    A.  Or  in  some  other  way. 

Q.  A  failure  to  comply  with  the  notice  sent  you  is  treated  how  ? 
A.  Then  the  tax  commissioners  in  their  jurisdiction  can  assess; 
J  think  they  have  a  right  in  many  cases  to  double  the  amount 
that  they  can  get  hold  of. 

Q.  And  that  holds  as  against  the  property?     A.  Yes,  sir. 

Q.  Is  there  a  review  of  the  amount  returned  in  the  office;  it 
can  be  reviewed?  A.  Yes,  sir. 

Q.  Penalties  attached  for  false  swearing?  A.  Yes,  sir;  very 
severe. 

().    Severe   penal!  ies?      A.    Yes,   sir. 

(>.  Have  you  any  knowledge  as  lo  how  that  part  of  the  law* 
operates;  as  to  whether  it  is  necessary  to  punish  people?  A.  l\ 
don't  think  it  is  so. 


217 

Q.  Has  there  been  so  general  as  to  make  it  something  for  which 
to  fear,  this  listing  system?  A.  I  don't  think  so;  I  think  it 
operates  as  in  this  State  where  an  individual  comes  before  the 
assessors  and  swears  off  his  personal  property  sometimes;  the 
neighbors  think  he  has  sworn  pretty  strong,  but  they  ran  n<>1 
always  prove  it. 

Q.  Your  opinion  concerning  this  4,000,000,000  was  made,  up 
in  what  way;  you  made  that  report,  I  believe,  while  you  were 
u  member  of  the  board  of  assessors?  A.  Yes,  sir. 

Q.  How  did  you  reach  that  estimate?  A.  hi  relation  to  the 
equalization  of  realty  or  personal? 

Q.  Personal?  A.  From  interviews  and  the  property  itself; 
from  the  banking  and  corporate  property  of  the  State;  the  lists 
of  mortgages  in  the  different  counties  we  found  as  being  recorded, 
and  various  ways. 

Q.  That  does  not  include  household  furniture  or  anything  of 
that  sort?  A.  No,  sir;  we  do  not  include  anything  that  would 
be  exempt  from  execution. 

Q.  That  is  a  fair  estimate  in  your  judgment  as  to  the  personal 
property  in  this  State  now  exempt  that  should  be  assessed?  A. 
Yes,  sir. 

Q.  What  proportion  of  that  4,000,000,000  would  you  estimate 
would  apply  to  New  York  county?  A.  Well,  I  should  say  sixty 
per  cent  of  it,  or  sixty-five. 

Q   That  would  be  about  2,500,000,000?     A.  Yes,  sir. 

By  Mr.  Guenther. 

Q.  Do  you  claim  that  amount  of  personal  property  now  escapes 
taxation?  A.  Yes,  sir. 

Q.  Is  it  not  a  fact  that  a  considerable  amount  of  that  is  already 
exempt  from  taxation  as  United  States  bonds,  etc.?  A.  There  is 
a  very  little  proportion  of  United  States  bonds  in  existence  now; 
another  thing  I  would  recommend  particularly,  and  that  is,  1 
would  require  that  the  true  consideration  be  expressed  in  every 
deed  for  the  conveyance  of  real  estate  and  the  grantor  and  grantee 
to  swear  to  it;  we  come  here  to  New  York  and  make  a  list  of  the 


218 

sales,  eight  or  ten  or  twelve  thousand  sales,  and  the  claim  at 
once  is  that  the  true  consideration  is  not  in  the  deed;  but  if 
you  make  it  a  misdemeanor  and  require  the  parties  under  the 
penalty  of  the  law,  and  a  fine  to  place  the  correct  value  thei 
then  when  you  have  got  the  sales  list  made  up  it  is  some  us 
for  an  equalization  table. 

Q.  As  regards  the  inheritance  tax,  have  you  given  that  any 
attention  —  the  operation  of  the  present  inheritance  tax?  A. 
think  that  law  is  a  good  law;  there  is  one  feature  that  I  objed 
to,  and  that  is  paying  the  county  treasurer  five  per  cent  which 
they  receive  to-day  for  doing  nothing;  the  surrogate  does  the 
work  and  they  get  the  five  per  cent;  in  some  of  those  large  counties 
they  double  their  compensation. 

Q.  Isn't  that  compensation  for  their  responsibility?  A.  There 
is  not  a  national  bank  in  the  State  of  New  York  that  would  not 
be  glad  to  do  it  for  one-eighth  of  one  per  cent  —  it  is  an  outrage. 

Q  Do  you  think  the  fixed  amount  of  f  10,000  is  a  correct  amount, 
about?  A.  I  would  not  make  it  lower  than  that. 

Q.  Would  you  make  it  higher?    A.  You  tax  all  you  can  get 
now;  I  mean  you  do  not  tax  small  estates  in  a  direct  inheritam 
tax. 

Q.  All  above  $10,000;  do  you  think  that  is  a  fair  sum  to  exempt, 
or  would  you  exempt  more?  A.  No;  I  think  that  is  about  righ! 

Q.  Now,  as  regards  the  collateral  inheritance  tax,  f  500  I  believt 
is  the  amount?  A.  I  think  that  is  about  right. 

Q.  You  would  not  make  any  change?    A.  No,  sir. 

Q.  How  about  this  grading  of  the  direct  inheritance  tax  abovi 
a  certain  sum,  increasing  it  $100,000  over  $500,000  and  ovei 
$1,000,000?    A.  From  my  own  observation  I  would  not  reooin- 
mend  any  changes  in  that. 

Uy  the  Chairman. 

Q.  How  long  were  you   State  assessor?    A.  Something  or< 
nine  years. 

Q.  Will  you  tell  the  committee  something  of  the  method  of  the 
work  of  your  board;  do  you  divide  the  work  or  work  together? 


219 

We  usually  went  together  in  visiting  the  counties;  that  was 
ur  general  rule. 

Q.  Now,  what  proportionate  part  of  the  year  did  you  sp  3ad  in 
dsiting  the  counties?  A.  We  usually  commenced  our  work  of 
"isiting  the  counties  about  the  middle  of  April,  and  took  the 
nost  of  the  time  until  October  or  September. 

Q.  How  many  days  did  you  sit  in  each  county?  A.  We  were 
n  each  county  with  the  board  one  day,  but  we  usually  spent  a 

od  deal  more  time  in  each  county  outside  of  that. 

Q.  What  was  that  time  devoted  to?  A.  Outside  of  the  meeting 
?vith  the  board? 

Q.  Yes,  sir?  A.  We  would  see  individuals  and  see  property 
tself,  and  gather  such  information  as  we  could. 

Q.  What  was  the  purpose  of  that  inquiry  ?  A.  It  was  to  estab- 
ish  the  fact  whether  property  was  increasing  in  value  or  deoreas- 
ng;  whether,  for  instance,  in  a  village,  if  we  found  a  great  many 
-acant  stores  and  houses,  and  former  factories  shut  up,  we  could 
see  that  property  in  that  town  was  worthless;  and  if  we  found 
all  the  villages  of  the  county  were  going  backwards;  if  we  found 
arm  property  depreciating;  if  we  found  the  fences  tumbling 
lown,  and  in  a  poor  state  of  cultivation,  the  farmer  was  going  to 
lie  wall. 

Q.  Would  not  the  fact  that  the  fences  were  tumbling  down  be 
in  evidence  of  a  lack  of  industry  on  the  part  of  the  farmer?  A. 
That  might  be  in  individual  cases,  but  the  property  was  worth  less 
im  way;  if  the  fences  were  up,  and  the  houses  painted  and  shade 
Drees  set  out,  and  evidences  of  thrift,  we  found  that  property  was 
worth  more. 

Q.  In  traveling  around  in  that  way,  did  you  make  any  com- 
parison between  the  reports  or  information  that  you  had  of  that 
property  and  what  you  found  it  to  be?  A.  Yes,  sir. 

Q.  What,  was  the  uniform  finding  as  to  the  actual  value  coin- 
pared  with  the  valuation  fixed  by  the  assessors?  A.  In  many 
cases  we  found  the  assessors  candid  and  truthful,  and  in  other 
cases  not  so  much  so. 

Q.  What  was  about  the  average  proportion  of  the  value  for 


220 

assessment  purposes  compared  with  the  true  value  of  the  land 
itself?    A.  We  found  the  average  property  of  the  State  of  Nei 
York  assessed  at  sixty -five  per  cent  of  its  full  value. 

Q.  Was  the  basis  of  valuation  uniform,  or  was  it  lower  in  01 
place  than  another?  A.  Why  certainly;  you  are  from  West- 
Chester;  in  Westchester  county,  we  count  that  one  of  the  poorest 
assessed  counties  in  the  State,  and  we  equalize  it  accordingly. 

Q.  They  assess  on  what  basis?  A.  A  very  low  basis;  in  the  city 
of  Albany  they  are  assessing  property  all  it  is  worth;  some  cases 
more  than  it  is  worth. 

Q.  How  did  the  rate  of  taxation  in  Westchester  county  coin- 
pare  with  the  others  even  on  its  low  valuation  that  you  speak  of 
A.  Our  reports  as  they  are  published  each  year  have  the  fill 
amount  of  State,  county  and  local  tax  paid  by  every  town  in  ti 
State,  so  that  it  is  a  clerical  matter  that  can  be  readily  got  at 
your  board  quicker  than  I  can  tell  you  by  memory. 

Q.  You   assume,    of   course,   that  Westchester   county   is 
expensive  to  run  as  any  other?    A.  Yes,  sir. 

Q.  And  if  the  basis  of  valuation  is  so  low  the  rate  must  be 
consequently  high?  A.  Cm-tainly  it  is;  so  fair  as  the  State 
taxes  are  concerned  it  pays  a  higher  rate  of  tax  just  as  much  as 
the  State  Assessors  put  on  and  take  off  some  other  that  iaj 
assessed  too  high. 

Q.  When  you  find  lluil  a,  county  has  used  a  low  basis  of  val- 
uation, when  you  come  to  make  your  equalization,  you  increase 
it  without  regard  to  what  they  have  done?  A.  Yes,  sir;  we 
bring  it  to  the  average  of  full  value. 

Q.  The  rate  would  be  the  same?  A.  Yes,  sir;  the  rate  would 
be  the  same  on  the  full  value,  but  not  on  the  assessed  value;  it 
is  the  same  on  the  full  value  all  over  the  State. 

Q.  Now,  I  see  that  you  join  in  a  recommendation  to  adopt  the 
listing  system?  A.  Yes,  sir. 

Q.  Will  you  kindly  tell  the  committee  what  investigation  you 
made  before  making  that  recommendation?  A.  We  wrote  to* 
the  tax  commissioners  of  Pennsylvania,  Ohio,  Indiana,  Massachu- 
setts and  the  different  States,  or  quite  a  number  of  them,  where 


221 

that  system  was  prevailing,  asking  them  for  their  methods,  and 
also  asking  as  to  the  effect  it  had  upon  increasing  the  amount 
of  personal  property,  and  the  general  satisfaction  the  law  had 
given. 

Q.  And  the  only  information  you  had  come  from  assessing 
officers?  A.  Largely  that;  of  course,  where  we  had  an  acquaint- 
ance with  the  individuals  in  different  States  we  interrogated 
them  also. 

Q.  You  did  not  go  into  the  several  States  to  make  inquiries? 
A.  No,  sir;  we  wrote  to  individual  acquaintances  that  we  had  in 
many  of  the  States;  some  of  them  practical  men;  I  know  I  wrote 
several  letters  to  some  in  Ohio  and  some  in  Massachusetts. 

By  Mr.  Creamer. 

Q.  Where  did  you  get  your  figures  as  to  the  percentage?  A. 
From  the  State  officers;  in  nearly  every  case  they  sent  us  their 
pamphlets  showing  the  percentages,  etc. 

By  the  Chairman. 

Q.  Now,  your  experience  was  that  the  proportion  of  personal 
property  since  the  adoption  of  the  listing  system  in  those  several 
States  had  increased  materially?  A.  That  was  the  invariable 
report  in  every  case. 

Q.  Now,  the  assessment  of  personal  property  was  pretty  gene- 
ral in  those  States?  A.  It  was  increased  largely  after  the  law 
went  into  effect. 

Q.  For  instance,  in  the  State  of  Massachusetts;  they  have  a 
1  is  ling  system,  I  think,  thai,  requires  a  return  of  all  kinds  of 
personal  property,  including  farm  stock?  A.  Yes,  sir. 

Q.  And  implements?    A.  Yes,  sir. 

Q.  Do  you  mean  in  recommending  the  adoption  of  a.  listing 
system  in  this  State  to  favor  the  assessment  of  farm  stock  and 
farm  implements,  for  general  government  purposes?  A.  For 
State  purposes;  yes,  sir;  as  I  said  in  the  beginning  I  am  in  favor 
of  assessing  all  property  in  the  State  that  requires  the  protection 
of  the  government. 


222 

Q.  You  would  not  exempt  from  any  kind  of  taxation  of 
soiial  property?    A.  I   am   not  prepared   to  say   as   to   savi 
banks  or  life  insurance  companies. 

Q.  I  speak  now  particularly  with  a  view  to  the  interests 
the  rural  parts  of  the  State  —  the  agricultural  parts  of  the  Sta 
are  you  in  favor  of  including  the  stock  and  implements  of  t 
farmer?     A.  Yes,  sir. 

Q.  For  assessment  purposes?     A.  Yes,  sir. 

Q.  You  think  the  farmers  generally  would   be   satisfied   wit- 
that?     A.  I  certainly  think  they  would  if  all  the  properly  of  th 
State  is  assessed,  because  the  little  fraction  of  one  per  cent  that 
the  farmers  would  be  increased  —  look  at  the  millions  now  going 
scot  free;  you  couldn't  find  a  farmer  with  any  intelligence  that 
couldn't  see  that. 

Q.  All  of  the  witnesses,  I  think,  who  have  preceded  you  have 
been  in  favor  of  divorcing  the  collection  of  taxes  for  the  expenses 
of  the  State  government  and  for  local,  town  and  county  purposes; 
what  have  you  to  say  to  that  proposition?  A.  I  think  it  would 
be  well  if  the  State  tax  was  wholly  collected  independently  and 
outside  of  the  local  taxes. 

Q.  In  other  words,  they  favor  relieving  real  estate  altogether 
from  the  tax  for  the  support  of  the  general  state  government;  what 
do  you  say  to  that?  A.  I  think  that  the  sooner  it  can  be  done 
the  better;  there  would  be  no  need  of  any  State  board  of  equali- 
zation, or  any  friction  between  the  counties;  each  county  would 
take  care  of  itself,  and  there  wrould  be  no  feeling  that  one  county 
was  equalized  too  high  or  too  IOAV. 

Q.  If  that  system  was  adopted  that  would  have  something 
to  do  with  the  general  proposition  which  you  make  about  the 
assessment  of  personal  property,  would  it  not?  A.  Then  the 
supposition  that  I  make  would  be  a  good  one,  but  it  would  only 
affect  county  and  town  taxes ;  it  would  not  affect  the  State  taxes. 

Q.  If  means  could  be  devised  by  legislation  whereby  the  expenses 
of  the  general  government  can  be  borne  by  a  general  tax  on  other 
property  than  real  estate  then  you  would  be  in  favor  of  leaving 
it  to  the  local  authorities  to  determine  what  property  they  shoi 


1 


223 

assess  for  local  purposes?    A.  No,  sir;  I  would  not  go  so  far  as 

I  that;  I  would  have  a  general  law  that  would  apply  to  the  whole 
[State;  I  would  not  make  a  law  that  would  apply  to  one  county; 

I 1  don't  think  we  have  boards  of  supervisors  intelligent  enough  to 
I  draft  such  laws. 

Q.  But  you  can  understand  that  what  might  be  good  for  Jefferson 
[county  might  not  be  good  for  New  York  county.  A.  So  far  as 
[Xow  York  is  concerned  it  is  very  true;  if  New  York  wanted  some- 
thing for  the  city  itself  that  did  not  affect  any  other  interests, 
I  would  not  interfere  with  it. 

Q.  Suppose  that  the  authorities  of  the  city  of  New  York  should 
want  to  open  a  field  that  would  invite  capital  and  that  they  should 
conclude  to  relieve  personal  property  altogether  in  the  county  of 
New  York  —  that  it  would  be  the  best  means  of  inviting  that 
capital,  would  you  be  in  favor  of  vesting  the  local  authorities 
with  that  power?  A.  Certainly,  if  the  people  wanted  it  and  if 
they  paid  their  taxes  I  do  not  see  why  outsiders  should  interfere. 

Q.  Assuming  that  the  State  tax  is  provided  in  some  other  way? 
A.  Yes,  sir. 

Q.  You  think  it  would  be  well  to  leave  to  the  county  of  New 
York  the  right  to  determine  by  what  means  it  can  raise  its  tiix 
for  the  expense  of  local  government;  why  would  it  not  be  good 
to  leave  it  to  the  other  thirty -five  counties  of  the  State?  A.  Because 
largely  the  same  law  would  not  apply,  New  York  is  a  commercial 
city;  its  interests  are  different  from  any  other  in  the  State;  there 
is  not  but  one  New  York  in  the  United  States;  and  what  might 
be  a  good  thing  hereafter  it  should  be  determined  by  its  citizens 
would  not  apply  at  all  to  the  rural  counties. 

Q.  You  think  that  the  average  local  legislative  body  of  the 
county  is  not  as  competent  as  the  local  Legislature  of  the  county 
of  New  York  to  take  care  of  their  own  interests?  A.  I  would  not 
recommend  to  have  every  local  county  legislature  tinkering  every 
year  with  the  subject;  I  would  not  give  him  jurisdiction  to  change 
the  method  of  assessment  and  taxation  ;  I  think  we  would  be  in 
confusion  all  the  time. 


224 

Q.  Then  you  think  that  while  it  might  be  safe  to  extend  to 
New  York  the  right  of  local  self-government  on  the  question  of 
taxation  it  would  not  be  well  to  extend  it  to  the  other  counties 
of  the  State?  A.  I  don't  think  it  would. 

Q.  How  would  it  in  your  judgment  apply  to  the  other  counties 
containing  larger  cities;  Kings  county,  Erie  county,  YOU  own 
county?  A.  The  only  one  county  in  the  State  aside,  from  New 
York  that  can  be  considered  a  commercial  city  is  Buffalo ;  Brooklyn 
is  not  a  commercial  city  except  as  tributary  to  New  York,  and 
the  same  laws  that  would  be  .fairly  applicable  might  not  do  in  the 
assessment  of  the  country. 

Q.  Don't  you  find  that  after  conferring  from  year  to  year  with 
the  local  body  of  Westchester  county  that  they  have  a  verv 
superior  class  of  men  in  that  board;  I  mean,  as  a  whole,  not  indi 
vidually?  A.  I  should  say  as  a  whole  they  average  with  the 
other  counties  of  the  State. 

Q.  The  people  of  the  county  having  faith  in  the  integrity  and 
good  judgment  of  that  local  legislative  body,  why  should  not 
they  be  entrusted  to  do  business  for  the  best  interests  of  th< 
constituent?    A.  I  do  not  think  that  at  present  they  have  electe< 
men  that  are  qualified;  there  are  many  bright  men  in  the  boai 
of  supervisors;  some  of  them  quite  equal  to  the  men  that  meet 
in  the  Assembly  or  Senate,  but  they  are  not  all  of  that  character; 
the  average  in  the  State  Legislature  is  above  the  average  of  the 
coiiiilj     legislatures;     in     Chautauqua     county     we     find     men 
iii    the   county  boa,rds    that  had   formerly   served   the   State   in 
iho  Legislature,  and  also  St.  Lawrence  county. 

Q.  In  a  general  way,  what  modification  would  you  suggest  ii 
the  existing  law  other  than  you  have  suggested,  which  would  be 
for  the  better  interests  of  the  agricultural,  manufacturing,  ^orn 
mercial,  labor,  banking  or  other  interests  of  the  State?    A.  ] 
would  recommend  that  the  property  of  estates  should  be  assessed 
where  the  property  exists  —  where  the  decedent  dies;  I  would  not 
allow  an  executor  living  in  another  town,  county  or  possibly  out- 
side of  the  State,  to  take  that  property  away  with  him. 


225 

Q.  You  would  tax  the  property  where  it  is?  A.  Yes,  sir;  take 
I  personal  property  where  it  is;  you  can  not  say  where  it  is,  but  I 
I  would  let  that  property  be  assessed  where  the  decedent  dies. 

Q.  What  do  you  say  in  connection  with  the  taxation  of  bonrtt* 
jnnd  mortgages?  A.  I  have  already  said  that  unless  there  can  be 
I  some  method  devised  for  reaching  them  all  I  am  in  favor  of  not 
I  taxing  any;  unless  we  can  have  better  laws  than  we  have  now;  I 
•don't  think  we  get  five  per  cent  of  them  now. 

Q.  Would  you  be  in  favor  of  taxing  the  owner  of  the  fee  as 
I  now  upon  the  full  value  without  regard  to  the  mortgage,  and  then 
in  addition  taxing  the  holder  of  the  mortgage?    A.  Of  course. 

Q.  Wouldn't  that  be  double  taxation?  A.  I  know  it  is  a  very 
common  saying  that  is  double  taxation. 

Q.  Do  you  think  it  would  be?  A.  I  think  it  is  a  relief  to  the 
owner  of  the  realty  if  he  is  assessed  at  100  per  cent,  and  an  indi- 
vidual holds  a  mortgage  for  half  of  it;  if  that  mortgage  could  be 
assessed,  the  owner  pays  so  much  less  taxes. 

Q.  You  know  that  under  the  present  system  in  valuing  realty, 
no  allowance  Is  made  for  an  incumbrance?  A.  No,  sir;  they  have 
no  right  to. 

Q.  Suppose  we  go  on  and  assess  the  realty  without  regard  to 
the  mortgage,  and  that  in  addition  to  that,  having  assessed  the 
land  for  a  full  value,  you  also  assess  the  owner  of  the  mortgage, 
his  capital  being  invested  in  this  piece  of  property  which  is 
already  assessed  for  its  full  and  true  value,  do  you  not  consider 
that  double  taxation?  A.  Yes,  sir;  but  that  would  apply  to  any 
evidence  of  debt  we  have  got  just  the  same. 

Q.  But  the  debtor  gets  no  benefit  under  the  law  as  it  stands; 
now,  would  you  tax  both  the  debtor  and  the  creditor?  A.  He 
does  get  the  benefit  if  the  mortgages  are  all  assessed,  because  the 
rate  of  taxation  is  reduced  just  as  much  as  you  assess  property. 

Q.  Would  not  that  be  taxing  capital  twice?  A.  But  you  reduce 
your  rate  accordingly. 

Q.  My  question  is,  do  you  not  consider  that  would  be  taxing 
capital  twice?    A.  Yes  and  no  both;  in  one  of  our  reports  I 
29 


think  we  recommended  to  rebate  in  the  payment  of  interest;  for  j 
instance,  I  buy  a  farm  worth  f  10,000,  and  you  have  got  a  mortgage  j 
on  it  of  $5,000,  when  I  pay  the  interest,  then  I  am  allowed  as 
rebate  to  charge  against  the  holder  of  the  mortgage  one-1 
of  the  tax  that  I  pay. 

By  Mir.  Creamer. 

Q.  Providing  he  is  taxed  on  the  mortgage?  A.  Then  he  woi 
not  be  taxed  at  all ;  then  do  away  with  the  tax  on  the  mortgage, 
but  let  the  holder  of  the  mortgage  consent  to  reduce  his  interest; 
let  that  be  a  rebate  for  the  proportion  that  that  mortgage 
to  the  farm;  whatever  the  value  of  the  mortgage  is  to  the  whol< 
value  that  to  be  rebated  in  payment  of  interest. 

By  the  Chairman. 

Q.  In  the  county  of  New  York  there  are  a  large  number 
loans  on  real  estate  where  the  rate  of  interest  is  as  low  as  thr 
and  a  half  and  four  per  cent;    now  the  rate  of  taxation  in 
county  of  New  York  this  year  I  believe  is  1.85;  now,  what  eff< 
do  you  think  that  would  have?    A.  That  is  1.85  upon  the 
value. 

Q.  But  the  loan  there  can  be  no  question  if  you  assess  the 
mortgage  as  to  the  value;  it  would  be  assessed  upon  its  face 
value.  A.  Certainly. 

Q.  Then  a  mortgage  that  paid  three  and  a  half  or  four  per  cent 
if  you  assess  it  on  its  full  value  and  the  rate  was  1.85  what  effect 
do  you  think  that  would  have  upon  the  outstanding  mortgages 
that  have  matured;  for  instance,  do  you  think  that  the  mortgagee 
would  be  apt  to  allow  the  loan  to  remain  or  call  it  in?  A.  Call 
it  in  if  he  could  do  better  with  the  money;  if  he  could  find  a 
better  place  for  it  he  would  do  that  anyway. 

Q.  Taking  it  at  four  per  cent  under  the  circumstances  I  have 
spoken  of,  his  interest  on  his  money  would  be  cut  down  from  fourt 
to  two  fifteen,  would  you  consider  that  a  fair  yield  for  his  invest- 
ment? A.  No;  I  don't  know  as  it  would  operate  that  way 
really. 


227 

Q.  Why  not;  he  gets  four  per  cent  interest  on  'his  money,  and 

the  county  of  New  York  requires  him  to  pay  a  tax  of  1.85,  why 
would  not  that  increase  the  earnings  of  his  mortgag'e  to  2.15  per 
ccnl.?  A.  It  would  unless  you  so  largely  increase  the  property 
on  the  assessment-roll  that  you  made  a  low  rate;  if  the  rate  was 
made  lower  it  would  not  be  that  way;  the  tax  would  be  lower 
if  you  increase  the  amount  on  your  tax  roll;  you  have  got  the 
Kline  amount  to  raise,  but  you  have  double  the  amount  on  your 
assessment-roll. 

Q.  But  I  speak  now  of  a  county  where  the  tax  rate  is  exception- 
ally low  — the  county  of  New  York;  now,  we  will  assume  that 
it  is  the  county  of  Kings,  where  the  tax  rate  is  very  much  higher, 
and  the  rate  of  interest  over  there  we  will  say  is  four  and  a  half, 
and  tax  a  mortgage  for  its  full  amount,  what  effect  would  that 
have  on  the  investment?  A.  If  the  mortgage  is  not  paying  any 
tax  now  —  under  the  present  law  the  mortgag'e  should  be  assessed; 
the  law  is  not  changed;  all  the  difference  is  you  are  proposing  a 
law  to  impose  a  tax;  the  present  law  calls  for  the  assessment  of 
that  mortgage. 

Q.  I  am  trying  to  get  your  views  ,on  the  wisdom  of  either  con- 
tinuing the  law  to  assess  mortgages  or  to  so  fix  the  law  that  they 
will  not  be  assessed  at  all.  A.  All  the  difference  is  the  present 
law  assesses  those  mortgages  every  dollar,  but  the  assessors  can 
not  find  the  mortgages;  this  is  a  case  where  the  mortgagor  knows 
where  his  best  interest  is. 

Q.  Suppose  the  Legislature  could  devise  a  means  that  would 
make  it  definite  and  certain  to  the  assessors  as  to  who  were  the 
owners  and  holders  of  mortgages,  what  do  you  say  then  about 
tlir  wisdom  of  assessing  them  for  their  full  and  true  value  at  the 
same  rate  as  real  estate  is  assessed?  A.  If  there  can  be  any  way 
devised  to  locate  these  mortgages  then  I  say  assess  all  the  prop- 
erly, both  real  and  personal. 

Q.  Notwithstanding  the  fact  that  real  estate  is  assessed  to  its 
full  value  you  would  also  assess  the  mortgage?  A.  Yes,  sir;  you 
simply  let  each  man  pay  his  proportion;  if  you  doubled  the  prop 
erty  on  the  assessment-roll  you  reduce  the  rate  one-half;  the 
county  and  State  won't  take  any  more  when  each  man  is  paying 
ihis  full  proportion  of  it. 


228 

By  Mr.  Stranahan. 
Q.  It  is  more  equitably  distributed?    A.  Yes,  sir;  that  is  all. 

By  the  Chairman. 

Q.  As  a  matter  of  fact,  now,  does  not  the  owner  of  the  fee 
pay  the  tax  upon  the  money  invested  in  his  property  whether 
by  himself  or  the  mortgagee?  A.  I  don't  think  he  does  in  all 
cases. 

Q.  We  will  assume  the  assessors  make  oath  that  they  have 
assessed  every  piece  of  property  contained  in  their  assessment- 
roll  for  its  full  or  true  value  —  whether  they  swear  to  the  truth 
or  not  I  am  not  responsible;  we  will  assume  they  tell  the  truth; 
I  pick  out  a  piece  of  property  valued  at  $50,000,  which  has  $25,000 
mortgage  on  it;  it  is  assessed  at  $50,000,  and  the  owner  of  the 
fee  pays  a  tax  of  $50,000;  I  ask  you  whether  he  is  not  paying 
one  tax  upon  all  the  money  invested  in  that  realty?  A.  Yes,  sir; 
he  pays  and  the  mortgagor  pays  what  is  invested  in  the  mortgag( 

Q.  Does  not  the  owner  of  the  fee  pay  upon  the  full  and  tru< 
value  of  that  land,  and  all  the  money  invested  in  it?  A.  Yes,  sir. 

Q.  Now,  suppose  you  also  tax  the  man  who  gave  him  th( 
$25,000  on  bond  and  mortgage;  do  you  not  consider  that  interest 
is  being  taxed  twice?  A.  The  same  indiivdual  is  not  paying  11 

Q.  But  isn't  it  two  taxes  upon  the  same  capital?    A.  No,  sir: 
I  do  not  look  upon  it  in  that  way;  it  is  a  very  common  way 
reasoning,  I  know. 

Q.  The  owner  of  the  fee  only  has  a  $25,000  interest  in  it?  A. 
That  is  all;  if  you  can  devise  a  way  of  reaching  the  mortgage 
you  might  assess  the  owner  his  equity  in  it;  that,  of  course, 
would  get  at  it  exact. 

Q.  I  want  to  get  at  your  views  as  to  the  wisdom  of  a  policy 
that  would  assess  the  owner  of  a  fee  to  the  extent  of  his  equity 
and  then  levy  a  tax  upon  the  mortgagee  to  the  extent  of  his 
interest?  A.  If  you  can  devise  any  law  to  reach  the  mortgages 
I  would  say  do  it. 

Q.  Do  you  think  that  would  be  just?    A.  Yes,  sir. 


229 

By  Mr.  Creamer. 

Q.  If  the  $2,600,000,000  were  placed  on  the  tax-books  the  rate 
I  of  per  cent,  instead  of  being  1.85,  would  be  something  like  two- 
thirds  of  one  per  cent;  that  would  be  deducted  from  the  interest 
I  of  the  mortgage?    A.  That  is  right. 

Q.  Therefore,  there  would  not  be  anything  more  except  an 
I  equality  of  taxation?  A.  That  is  right;  you  will  find  in  many 
I  of  the  rural  towns,  when  you  come  to  school  purposes,  the  mort 
I  gagee  does  not  live  in  the  town,  and  you  would  have  but  very 
I  little  property  to  assess  in  some  cases. 

Q.  But  on  your  theory  we  tax  the  property  where  we  find  it? 
I  A.  I  would  not  favor  taxing  evidences  of  debt  wherever  you  found 
I  them?  A.  I  would  assess  evidences  of  debt  where  the  owner 
I  resides  and  property  wherever  it  is  located. 

Q.  Wouldn't  it  be  just  as  equitable  to  assess  evidences  of  debt 
I  where  they  exist?    A.  Not  at  all;  they  do  not  require  the  pro- 
tection of  government;  if  I  have  got  a  mortgage  in  Jefferson 
county  collect  that  in  Jefferson  county;  in  the  Supreme  Court,  can 
&ue  a  man  that  lives  in  the  adjoining  county. 

By  Mr.  Guenther. 

Q.  You  say  evidences  of  debt  require  no  protection?  A.  Not 
in  the  way  that  it  is  liable  to  be  burned  or  destroyed;  it  cost 
Alleghany  county  and  Pittsburgh  f 2,000,000;  if  it  was  in  this 
city  the  county  would  have  to  pay  the  loss. 

Q.  How  about  the  holder  of  a  mortgagor  living  in  another 
State?  A.  I  guess  you  can  not  reach  them. 

Q.  Don't  you  think  it  would  be  as  well  to  so  amend  the  law 
that  he  might  be  reached  if  mortgages  are  to  be  taxed?  A.  An 
international  policy,  perhaps,  would  conflict  there;  if  we  have 
a  law  in  the  statute-books  that  assesses  all  western  mortgages  — 
if  we  assume  to  do  that  in  the  State  of  New  York  —  may  be  we 
have  got  to  allow  some  privileges  to  other  States. 

Q.  That  is  the  same  theory  you  advanced  in  the  first  place  as 
to  taxiug  property  wherever  it  exists?  A.  I  make  a  difference 


230 

between  evidences  of  debt  rind  property  —  property  that  requires 
the  protection  of  government  is  different. 

By  Mr.  Creamer. 

Q.  I  ask  with  regard  to  your  observation  as  to  the  rate  gent 
rally  in  agricultural  counties;  what  is  generally  the  rate  on  $100' 
A.  The  rate,  of  course,  in  rural  counties  varies,  but  as  a  rule  it 
is  very  much  less;  in  the  town  where  T  live  the  tax  rate  is  sixty- 
four  hundredths. 

Q.  The  assessed  valuation?    A.  The  tax  rate. 
Q.  Sixty-four  hundredth^?    A.  Sixty-four   cents   on   $100   of 
valuation;  in  New  York  it  is  one  dollar  and  eighty-five,  and  in  the 
town  where  I  live  it  is  sixty  -four  hundredths. 

Q.  Is  that  high?    A.  It  is  about  the  average. 

Q.  In  agricultural  towns?    A.  Yes,  sir;  it  is  a  small  village. 

Q.  That  is  a  fair  criterion?    A.  About  the  average. 

Q.  It  will  average  about  one-third  of  what  ours  is?  A.  Yes, 
sir;  we  have  no  privileges  to  be  taxed  for;  a  farming  town  has 
no  sidewalks  or  gas  or  lights  in  the  street,  and  all  those  things 
that  -make  your  tax  heavy  they  do  not  have. 

By  the  Chairman. 

Q.  Do  you  know  what  the  average  rate  of  taxation  is  on  $1,000 
in  St.  Lawrence  county?  A.  I  could  hardly  tell  you;  I  should 
think  it  would  average  aboat  seventy-five  cents  to  the  dollar. 

Q.  That  would  be  seven  dollars  and  fifty  cents  on  a  thousand? 
A.  Yes,  sir. 

Q.  How  does  it  average  in  Jefferson  county?  A.  About  that; 
in  the  town  where  I  live  it  is  sixty-four  cents  this  year;  that  is 
about  the  average;  the  city  of  Watertown  would  be  higher;  I 
think  in  Watertown  it  is  nearly  two  per  cent. 

Q.  Have  you  ever  made  any  calculation  as  to  the  proportion  of 
State  tax  that  is  paid  by  i:he  farmers  of  the  State  —  the  total? 
A.  Our  reports  will  show  That;  we  print  that  each  year  in  our 
reports. 


231 

Q.  I  think  I  have  heard  it  asserted  that  the  agricultural  lands 
in  the  State  paid  about  eight  and  a  half  per  cent  of  the  total  tax? 
A.  I  should  think  more  than  that;  on  the  valuation  of  course  every 
$100  of  the  State  tax  on  the  actual  valuation  is  the  same 
whether  it  is  found  in  the  rural  towns  or  the  city  of  New  York. 

Q.  One  of  the  purposes  of  this  inquiry  is  to  see  what  means  we 
can  devise  to  relieve  the  agricultural  interests  of  the  State  from 
their  present  taxation  burdens;  now,  if  they  only  pay  eight  and 
one-half  per  cent  or  about  that,  of  the  total  expense  of  the  State 
government;  now,  do  you  see  any  way  by  which  it  could  be 
decreased  other  than  to  drop  the  system  of  taxing  real  estate  for 
general  State  purposes?  A.  The  different  ways  that  have  been 
suggested  I  think  would  do ;  anything  by  which  you  would  increase 
tihe  amount  of  personal  property  in  the  State  relieves  realty  to 
that  extent. 

Q.  Does  it  not  appear  to  you  that  the  burdens  that  fall  upon 
the  agricultural  counties  of  the  State  are  largely  due  to  the 
expense  of  local  government?  A.  That  is  very  true. 

Q.  The  proportion  of  the  total  State  tax  paid  by  those  inter- 
ests being  very  small?  A.  It  is  not  only  farmers,  but  in 
every  village  and  every  city  you  will  find  mechanics  and  thrifty 
individuals  that  are  trying  to  pay  for  a  house  and  lot;  the  burden 
on  that  individual  is  just  as  burdensome  as  to  the  farmer;  it  is 
to  the  real  estate  of  the  country. 

Q.  Do  you  remember  approximately  the  proportion  of  the  total 
State  tax  paid  by  the  counties  of  New  York,  Kings,  Erie  and 
Westchester?  A.  The  county  of  New  York  pays  about  forty-five 
per  cent  of  the  entire  State  tax. 

Q.  I  am  advised  that  the  'our  counties  I  have  named  pay  about 
seventy-five  per  cent  of  the  total  State  tax?  A.  New  York  and 
Kings  pay  fifty-six  per  cent  of  the  entire  State  tax. 

Q.  And  Erie  and  Westchester,  I  understand,  make  up  the 
difference  between  that  and  what  I  have  said?  A.  You  will 
find  with  the  comptroller  last  year  that  our  report  shows  the  full 
value  of  every  county  and  the  amount  paid. 


232 

Q.  My  purpose  in  making  this  inquiry  is  with  a  view  of  ascer- 
taining whether  the  burdens  which  are  oppressing  the  mi 
counties  of  the  State  are  not  the  result  of  local  govermnei 
rather  than  the  expense  of  the  State  government;  now,  if 
burden  of  taxation  of  the  rural  counties  is  largely  owing  to  tl 
expense  of  local  government,  how  can  the  Legislature  relieve  them' 
A.  If  you  get  all  the  personal  property. 

Q.  If  you  reach  the  personal  property  in  those  rural  counti( 
A.  That  is  it. 

Q.  Is  not  the  law  such  to-day  that  they  can  reach  the  bulk  ol 
the  personal  property  in  those  counties  if  they  want  to?  A, 
They  fail  to  do  it. 

Q.  Is  not  that  rather  the  fault  in  the  execution  of  the  law  tha: 
in  the  law  itself?    A.  I  thiuk  the  assessment  laws  we  have  g< 
now  —  we  have  had  not  had  any  practical  change  for  sixty  years: 
I  think  the  wisdom  of  those  days  should  make  some  improv< 
ment. 

Q.  For  instance,  in  the  city  of  Watertown  have  not  the  Iocs 
assessors  the  right  to  assess  personal  property — money  invest* 
in  business  —  stock?    A.  The  difficulty  has  been  to  find  it;  w< 
want  more  thorough  laws  to  give  better  opportunities  to  find 
them. 

Q.  Supposing  you  knew  a  man  in  the  city  of  Watertown  that  had 
$25,000  invested  in  business;  he  could  be  assessed?  A.  No,  sir; 
he  would  claim  to  be  in  debt. 

Q.  Then  you  think  the  difficulty  now  is  the  right  of  offseting 
by  indebtedness?  A.  Yes,  sir. 

Q.  You  are  in  favor  of  wiping  that  out?  A.  Yes,  sir;  that  is 
the  most  radical  change  I  would  make. 

The  committee  then  went  into  executive  session. 

On  motion  the  committee  adjourned  to  meet  on  Tuesday, 
December  27,  1892,  at  2  p.  m.,  same  place. 


OF  TSB 

UNIVERSITY 

233 

-*    •     — «" 

Superior  Court,  Part  2. 

New  York,  December  27,  1892. 
The  committee  met  pursuant  to  adjournment. 

Alexander  E.  Orr,  called  as  a  witness,  being  duly  sworn,  tes- 
fied  as  follows: 
By  Mr.  Creamer. 

Q.  Have  you  read  the  resolution  authorizing  this  committee 
o  make  inquiry  on  certain  points?  A.  I  can  not  say  that  I  read 
t  all;  I  looked  over  it. 

Q.  You  understand  principally  the  object  of  the  inquiry  here 
3-day?  A.  Yes,  sir. 

Q.  You  have  been  in  business  in  this  city  for  many  years  past? 
L.  I  have. 

Q.  What  is  your  judgment  concerning  the  taxation  of  personal 
roperty  as  affecting  the  progress  of  business  of  our  State  during 
le  last  ten  years?  A.  The  taxation  of  personal  property  has 
een  very  light;  my  opinion  is  that  if  it  had  been  enforced  it 
rould  have  been  exceedingly  disastrous;  it  would  have  driven 
ipital  away  from  the  State. 

Q.  What  character  of  capital?  A.  Capital  not  permanently 
>cated;  capital  that  was  movable. 

Q.  What  would  you  describe  as  movable  property  that  would 
affer  in  case  of  the  tax  being  enforced?  A.  What  you  term 
personal  property  of  citizens,  money,  securities,  mortgages, 
le  evidences  of  debt. 

Q.  As  regards  corporations?  A.  No;  corporations  receiving 
tieir  authority  from  the  State  that  have  a  location  must  make 
*turns. 

Q.  Do  many  corporations  change  their  location  in  your  experi- 
nce  on  account  of  the  tax  laws?  A.  No;  I  don't  think  they  do, 
>ut  I  do  believe  that  because  of  the  tax  laws  a  great  many  cor- 
xxrations  that  would  have  been  bom  in  New  York  State,  as  it 
^ere,  have  received  their  charters  from  other  States. 

Q.  And  continued  to  do  business  in  New  York?  A.  And  do 
msiness  in  New  York. 

30 


234 

Q.  Outside  of  the  reduction  in  the  amount  of  the  fee  charged 
for  filing  articles  of  incorporation;  that  is  an  advantage,  I  believe; 
it  is  much  less  in  the  State  of  New  Jersey  than  in  this  State; 
what  advantages  have  corporations  in  other  States;  have  you  any; 
knowledge  on  that  subject?  A.  I  have  not  knowledge  enough 
express  an  opinion. 

Q.  Take  a  case,  for  instance,  that  has  been  quoted  here  (and 
there  is  now  nothing  private  about  it)  the  case  of  Mr.  Clatlin, 
tnough  the  Claflin  company  is  organized  under  the  laws  of  Ne^w 
Jersey,  still  the  corporation  pays  on  a  far  greater  sum  of  per- 
sonal tax  this  year  than  it  did  previous  to  being  incorporated  m 
New  Jersey;  there  must  be  some  advantage  therefor;  there  must| 
be  something;  possibly  it  would  be  well  to  look  to  the  firm  for 
information,  unless  you  have  some  knowledge  as  to  the  advan-- 
tages  obtained?    A.  I  am  not  a  stockholder  of  that  corporation,!, 
and  never  looked  into  it,  and  therefore  don't  know. 

Q.  We  only  mention  that  as  one  of  no  doubt  many;  it  there-  i 
fore  could  not  be  on  account  of  the  taxation,  because  they  pay  a>| 
larger  tax  than  before?    A.  I  think  the  inducement  was  10  incor- 
porate because  of  the  reduction  in  the  incorporation  fee  that  was** 
charged. 

Q.  That  is  but  bagatelle  in  comparison  with  the  increase  in-i 
the  amount  of  tax  that  they  pay  on  their  personal  property;  the 
amount  that  they  pay  on  the  one-eighth  of  one  per  cent  woulc 
be  a  trifle  in  comparison  with  the  large  increase  in  the  amount 
that  is  agreed  upon  by  their  own  consent  at  our  tax  office  here 
I  simply  call  your  attention  as  a  business  man  to  that  state  oi 
things,  Mr.  Orr;  now,  you  think  that  individuals,  as  a  general 
thing,  evade  the  tax  laws  on  personal  property  by  taking  up  resi- 
dence in  other  States;  that  is,  that  the  tax  laws  have  affected 
people  to  that  extent?     A.  No;  I  can  not  say  that;  I  think  thai 
is  as  I  said  before;  if  the  tax  upon  personal  property  was  enforced! 
it  would  have  that  effect,  but  because  it  is  known  that  effecl 
would  be  the  result,  personal  property  has  not  been  taxed. 


Q.  Then  the  fault  is  not  so  much  in  the  law  as  it  is  in  the 

on-enforcement  of  the  law  in  not  having  personal  taxes  assessed 

lid  collected?    A.  I  think  the  fault  lies  entirely  in  the  law,  and 

lie  remedy  has  been  in  the  non-enforcement. 

Q.  What  is  your  judgment  as  regards  having  a  similar  tax 

w  to  that  prevailing  in  other  States  on  personal  property;  say 

e-tenths  of  one  per  cent?    'A.  I  believe  this,  that  in  the  first 

ace,  if  the  tax  was  to  be  enforced,  those  persons  who  were  oon- 

ientious  would  absolutely  leave  the  city  or  State  and  select  a 

fferent  location;  those  persons  who  are  not  conscientious  would 

ade  it;  I  think  if  you  could  arrive  at  a  system  of  taxation  —  I 

ean  personal  taxation  —  which  would  prevent  a  man  who  will 

vade    through   misrepresentation,    from    taking   that   position, 

jcause  of  the  moderate  rate  of  taxation  imposed,  and  the  man 

to  is  conscientious  and  will  not  allow  himself  to  evade  it  from 

at  standpoint  will  prevent  him  from  going  away,  that  then  you 

ill  have  reached  a  point  when  you  will  derive  a  great  deal  more 

an  from  the  taxes  as  now  collected,  and  it  seems  to  me  you 

ould  avoid  the  evil  influences  of  what  we  term  now  the  tax 

xm  personal  property  —  the  possible  evil  influences, 

Q.  As  regards  a  tax  on  mortgages,  Mr.  Orr,  generally  speaking, 

making  up  the  assets  of  large  corporations;  do  you  believe  in 

^plying  similar  tax  to  such  catpital,  as  is  applied  in  other  large 

bates?    A.  I  don't  know  what  the  tax  is  in  other  large  States. 

(2-  About  one-half  of  one  per  cent?    A.  I  am  absolutely' opposed 

taxing  mortgages;    I  believe  it  would  be  a  very  disastrous 

ling  to  insist  upon  the  assessment  of  mortgages. 

Q.  it  is  done  in  other  States;  some  States  take  much  more  than 

ne-half  of  one  per  cent;  in  some  States  it  is  the  full  amount  of 

In1  rate  of  taxes.     A.  I  look  upon  the  taxation  of  a  mortgage 

imply  to  be  an  additional  tax  on  the  real  estate. 

g.  In    what   way?  .  A.  That  the  lender  of   the  money  would 

11  si  si  upon  a  rate  which  would  pay  the  ordinary  rate  of  interest 

.nd  tkc  additional  tax  he  would  have  to  pay  upon  the  mortgage. 

Q.  Has  that  been  the  experience  as  far  as  your  knowledge  goes 

vith  the  lenders  of  money  in  States  like  Pennsylvania  and  Mass- 


236 

achusetts?    A.  I  have  never  loaned  money  there  so  I  could 
tell. 

Q.  Have  you  any  knowledge  of  the  transfers  in  other  Statd 
where  there  is  such  a  law?  A.  No,  sir;  I  would  like  to  go  i 
little  further,  if  you  would  allow  me;  I  think  that  the  absoluft 
elimination  of  the  law  whereby  mortgages  could  be  taxed  woulc 
ultimately  result  in  a  less  rate  of  interest  to  the  mortgagor. 

Q.  Why?    A.  There  is  an  uncertainty  existing,  and  there  ad 
persons  who  are  sometimes  taxed  upon  mortgages,  and  especiallj 
estates;  now,  if  it  is  absolutely  known  that  that  was  eliminate* 
instead  of  taking  into  consideration  the  rate  of  interest  upoi 
money  loaned  upon  real  estate  with  the  possibility  of  the  tax  upoi 
the  mortgage,  the  money  would  be  forthcoming  at  a  lower  rat^ 
of  interest. 

Q.  But  if  the  mortgage  is  taxed  even  one-half  of  one  per  cenil 
that  is  a  relief  to  the  mortgagor  in  making  up  the  tax  roll;  Jj 
course,  if  the  mortgagee  is  paying  part  of  the  tax  why  the  morfcl 
gagor  is  not  paying.  A.  If  you  will  establish  it  absolutely  tha 
the  rate  of  personal  tax  upon  the  mortgage  can  not  be  more  thai 
one-half  of  one  per  cent,  it  would  have  its  influence  to  that  effedj 
in  the  direction  which  I  state,  of  reducing  the  absolute  rate  ojj 
interest  upon  the  mortgage. 

Q.  If  they  understood  what  it  rwas  to  be,  one-half  of  one  pel 
cent,  would  that  be  a  better  state  of  things  than  to  have  ail 
uncertainty  as  regard®  the  1.85  that  prevails  in  this  city?    A  j 
There  is  no  doubt  of  it;  I  think  so. 

Q.  You  think  so?    A.  There  is  a  great  deal  of  sentiment  aboul 
this  question  of  taxation  of  real  estate;  if  I  make  an  investmen  j 
in  a  piece  of  property  I  take  into  account,  first,  what  it  is  goinj  I 
to  pay  me;   now,  as  one  of  the  charges  I  take  the  tax  upon  tbJ 
property;   I  eliminate  that  from,  the  net  result;   I  take  also  ti 
insurance  upon  the  property,  and  I  eliminate  that  from  the  ne 
result;   I  take  the  expenses  of  keeping  it  in  repair,  and  then 
find  what  the  income  is  and  call  that  the  net  result;   if  you  di 
away  with  taxes  upon  real  estate,  you  simply  give  me  as  agains 
the  man  that  sold  it  to  me  the  advantage  between  non-taxes  an< 


237 

that  when  you  talk  about  it  not  being  fair  to  tax  real 
rtate  and  not  personal  property,  I  say  that  is  entirely  wrong. 
Q.  The  existing  state  of  things  is,  under  the  law,  that  when  you 
irchase  the  property  you  expect  to  pay  your  share  in  prosperity 
id  adversity  as  well,  as  regards  the  general  condition  of  things, 
iitih  all  other  citizens;  that  is,  the  owner  of  real  estate;  the 
w  says  that  he  is  no  more  at  a  disadvantage  in  the  case  of  panic 
an  the  holder  of  a  mortgage.  A.  But  the  holder  of  the  mort- 
ige  has  already  invested  in  that  real  estate,  and  already  paid 
xes. 

Q.  It  is  supposed  to  pay  taxes  but  it  does  not-.  A.  The  real 
tate  does. 

Q.  The  argument  that  is  used  that  it  would  be  double  taxation, 
is  that  any  weight  in  your  mind?  A.  Yes,  sir;  I  chance  to  be 
esident  of  a  savings  bank;  I  think  to-day  if  you  tax  a  mortgage 
>on  real  estate;  we  have  loaned  on  a  very  large  portion  —  you 
low  the  law  allows  us  to  loan  sixty-five  per  cent  of  the  amount 
our  deposit  upon  real  estate;  now,  the  result  of  that  is  that 
those  towns  here  real  estate  derives  the  benefit  of  the  money 
aned,  and  it  holds  to  creditors  a  portion  of  its  value;  now,  if 
>u  tax  a  mortgage  —  I  merely  make  this  as  an  expression  of 
hat  I  believe  would  be  the  result  — 

Q.  Do  you  mean  as  regards  savings  banks?  A.  As  to  all 
ortgages. 

Q.  Because  we  disclaim  at  once  any  desire  to  interfere  with 
.vings  banks;  Mr.  Chairman,  do  I  represent  the  committee 
ght  on  this? 

The  Chairman. —  Yes,  sir;  I  believe  so. 

Mr.  Quigley. —  A  question  may  arise  as  to  the  unclaimed 
^cumulations. 

The  Chairman. —  I  think  the  counsel  is  quite  right,  but  I  don't 
low  as  there  is  any  objection  to  Mr.  Orr's  view  as  to  that. 
The  witness. —  My  belief  i  3  that  if  you  enforce  a  tax  upon  mort- 
iges  that  you  would  have  a  universal  calling  in  of  loans  and  the 
amediate  effect  of  that  would  be  upon  real  estate,  and  an 
imediate  depreciation  of  value  of,  I  would  say,  at  a  rough  guess, 


238 


from  twenty-five  to  thirty  per  cent;  I  really  think  it  would  exceei 
that. 

Q.  What  becomes  of  all  these  profits  that  savings  banks  accul 
mulate  from  interest  on  money  loaned?  A.  As  savings  banks! 
you  know,  from  the  wisdom  on  the  part  of  the  Legislature,  ara| 
surrounded  by  almost  absolute  protection  when  the  trustees 
honest  men;  the  mortgage  is  really  the  element  which  enabl 
us  to  pay  to  the  savings  bonk  depositors  a  reasonable  amoi 
upon  the  amount  of  their  deposit;  in  the  first  place,  we  are 
allowed  to  take  any  of  the  bonds  of  corporations  or  of  cil 
outside  of  the  State  of  New  York;  we  are  confined  to  the  city 
New  York  and  the  cities  of  the  State  of  New  York,  the  State 
New  York  and  other  States,  and  United  States  bonds,  and 
addition  to  that  we  may  invest  in  bond  and  mortgage  in 
State  of  New  York;  now,  the  volume  of  money  in  the  savii 
banks,  and  perhaps,  gentlemen,  you  don't  know  this  —  there 
a  savings  bank  account  to  represent  every  five  persons  in 
State,  one  savings  bank  account  for  every  five,  and  in  the 
of  New  York  one  for  every  two  and  a  half;  in  Brooklyn 
is  about  three  —  one  in  every  three;  of  course,  there  are  a  gr< 
many  duplicates  in  this  case,  but  I  give  you  that  to  show  y 
the  volume  of  persons  interested  in  the  outcome  of  the  saving 
banks;  now,  the  city  of  New  York  is  able  to  borrow  its  mom 
and  mainly  because  the  savings  banks  have  so  much  money 
them  —  it  can  borrow  money  from  two  and  a  half  to  three 
cent,  and  the  State  of  New  York  can  borrow  it  at  a  little  less 
that  if  it  needs  it,  and  almost  all  the  towns  and  cities  in  the  Sts 
of  New  York  are  able  to  borrow  money  at  the  same  rate  —  tl 
money  which  we  invest  in  those  bonds  in  the  cities  —  eviden< 
of  debt  pay  only  what  we  receive  for  the  money  that  we 
upon  bond  and  mortgage,  plus  what  the  taxes  would  be  in 
place  where  the  savings  bank  is  located;  the  average  of 
savings  bank  bond  and  mortgage  loan  is  about  four  and  a  hi 
per  cent;  the  bonds  that  we  are  obliged  to  buy  under  the  lai 
in  the  State  of  New  York  will  not  average  more  than  three 
cent,  perhaps  a  little  less  than  three  per  cent;  so  you  see 


289 

ifference  ig  represented  really  by  what  the  nominal  tax  would 
e  between  the  two,  so  that  I  hold  that  the  city  of  New  York, 
le  city  of  Brooklyn,  Buffalo  and  the  city  of  Rochester  are  abso- 
iitely  borrowing  their  money  free  of  taxes  from  the  savings 
nstitutions. 

Q.  As  I  understand  it,  savings  banks  do  a  great  deal  of 
waning  on  bond  and  mortgage?  A.  Yes,  sir;  we  are  allowed  to 
ran  sixty-five  per  cent. 

Q.  On  your  deposits?    A.  Yes,  sir. 

Q.  On  that  sixty-five  per  cent  of  the  deposits  you  receive  at 
ast  five  per  cent  interest?  A.  No,  sir. 

Q.  I  mean  to  say  that  savings  banks  loan  to  individuals  at 
mr  and  a  half  per  cent?  A.  I  don't  think  the  average  of  savings 
anks  loans  would  be  over  that. 

Q.  I  mean  this  sixty-five  per  cent  that  is  loaned  to  individuals 

not  that  at  the  rate  of  five  per  cent?  A.  No,  sir;  sometimes 
?low  four  and  a  half,  and  a  good  deal  below  four. 

Q.  Do  you  mean  to  say  that  an  individual  can  borrow  of  a 
avings  bank  at  the  rate  of  four  and  a  half  per'  cent?  A.  I 
link  so. 

Q.  Do  you  know  of  any  such?  A.  Yes,  sir;  a  great  majority  in 
ur  banks  are  such;  we  are  debarred  under  the  laws  of  the  State 
mm  loaning  money  upon  real  estate  that  is  not  double  the  value 
f  the  property  loaned  upon,  and  that  value  must  be  certified  by 
wo  of  the  trustees  who  have  made  a  personal  examination  of  it; 
lerefore  those  are  what  you  call  very  choice  loans;  the  life 
Dsurance  companies,  fire  insurance  companies  and  trustees  of 
states  are  allowed  to  loan  what  they  consider  is  a  fair,  reasonable 
mount,  and  you  will  find  that  those  loans  generally  run  from 
ixty  to  sixty-five  per  cent  of  the  value,  and  parties  will  pay  a 
igher  rate  of  interest  for  loans  of  that  character  than  for  a 
avings  bank  loan,  which  must  be  of  necessity  a  very  choice 
oan. 

Q.  As  I  understand  it,  sixty-five  per  cent  of  your  deposits  can 
>e  loaned  by  the  bank?  A.  Yes,  sir. 


240 

Q.  And  thirty-five  per  cent  must  be  kept  by  the  bank  for 
purposes  of  business?    A.  We  can  not  have  more  than  ten 
cent  of  our  deposits  in  money  on  hand,  but  the  balance  must 
invested  in  such  securities  as  the  law  allows. 

Q.  Sixty-five  per  cent  of  your  deposits  would  be  loaned  on 
estate,  and  twenty -five  per  cent  on  securities  that  were  availal 
at  any  tune?    A.  Yes,  sir. 

Q.  And  ten  per  cent  would  be  in  cash?  A.  We  are  not  c< 
pelled  to  keep  ten  per  cent  in  cash,  but  we  can  not  keep  m< 
than  that. 

Q.  Do* you  do  that?    A.  I  think  from  five  to  ten  per  cent. 

Q.  What  would  be  the  average  of  the  earning  power  of 
money  of  a  savings  bank?    A.  If  you  will  look  at  the  returns 
will  find  that  the  amounts  paid  by  the  savings  banks  will  averag 
about  three  and  a  half  per  cent. 

Q.  I  don't  mean  paid  to  the  depositors;  I  mean  what  is 
average  per  cent  on  the  moneys  in  the  hands  of  the  bank?  A. 
don't  think  it  would  be  more  than  four  per  cent,  and  I  think  in 
great  many  less  than  that. 

Q.  They  don't  pay  more  than  three  and  a  half  per  cent  in  an; 
A.  Some  three  and  some  three  and  a  half,  and  the  old  banl 
where  they  have  a  large  accumulation,  some  pay  four. 

Q.  Do  you  know  whether  or  not  they  loan  the  accumulations 
deposits  which  have  been  unclaimed?  A.  I  think  they  are  v( 
light;  I  think  there  is  a  mistaken  idea  about  that. 

Q.  If  there  is  such  a  fund,  they  are  loaned  with  the  oth< 
funds?  A.  Yes,  sir;  and  the  surplus  —  all  the  savings  bnnl 
aim  to  have  a  surplus  —  we  ought  to  have  that  for  the  protectic 
of  the  savings  with  us,  but  after  that  arrives  at  fifteen  per  c< 
of  the  deposits,  it  must  be  distributed  among  the  depositors. 

Q.  By  what  means?  A.  Increased  interest;  we  rather  pref€ 
it  in  a  yearly  distribution,  so  that  if  one  year  we  do  not  mal 
quite  so  much  as  another,  the  interest  rate  does  not  vary. 

Q.  Is  there  any  power  under  the  law  for  any  one  to  find  out 
the  condition  of  those  accumulations  in  any  of  those  banks9 


241 

Yes,  sir;  we  have  to  publish  at  each  of  onr  annual  returns  to  the 
department  a  statement  of  the  number  of  accounts  that  have  not 
had  any  deposits  or  withdrawals  during  the  last  twenty  years. 

Q.  Do  you  give  the  amount  of  those?     A.  Yes,  sir. 

Q.  How  often  are  those  statements  made?    A.  Every  year. 

Q.  Is  that  compulsory  by  any  law  now  on  the  books?  A.  We 
understand  it  to  be. 

Q.  Is  that  sworn  to  by  any  officer  of  the  bank?  A.  Yes,  sir; 
the  bank  officers  —  the  president  and  the  treasurer,  I  think, 
swear  to  it. 

Q.  From  what  fund  do  savings  banks  build  those  enormous 
expensive  buildings  that  they  build  frequently  for  their  own 
purposes?  A.  I  don't  think  they  build  very  enormous  ones;  the 
bank  that  I  am  in,  we  have  between  twelve  and  thirteen  millions 
on  deposit,  and  we  estimate  the  value  of  our  building  $75,000;  I 
think  they  are  all  built  out  of  what  they  term  the  surplus. 

By  the  Chairman. 

Q.  That  is  as  good  an  investment  as  it  has?  !A.  I  think  it  is; 
that  investment  must  be  returned  and  it  is  returned  each  year 
to  the  department  — a  statement  of  it. 

By  Mr.  Quigley. 

Q.  Do  you  not  know  of  your  own  knowledge  where  some  banks 
have  built  extravagantly  in  that  way?  A.  If  a  bank  had  a  very 
large  surplus  and  was  doing  a  very  large  business,  I  think  it 
could  afford  to  build  a  large  building;  therefore,  the  amount 
would  depend  something  on  the  size  of  the  bank;  I  should  say, 
if  you  take  the  Bowery,  or  Bleecker  street,  or  the  Greenwich 
bank,  or  any  of  those  old  ones,  they  could  afford  to  build  a  better 
building  than  a  newer  bank  with  smaller  surplus. 

Q.  That  surplus  put  in  the  building  really  earns  no  money 
for  the  depositor?  A.  Yes,  sir;  some  of  them  do  not,  but 
others  do. 

Q.  From  what  source?    A.  As  to  the  bank  that  I  am  in,  we 
hav(!  surplus  rooms  rented  that  give  an  income  in  the  same  wav 
as  those  banks  do  on  deposit  on  discount* 
31 


242 

By  the  Chairman. 

Q.  Then,  you  do  not  have  to  pay  any  rent?  A.  No,  sir; 
take  that  new  building  of  the  Greenwich,  which  is  a  very  service- 
able building  —  I  suppose,  if  they  had  to  pay  rent  and  get  I  lie 
same  accommodations,  it  would  cost  them  a  good  percentage  on 
the  cost  of  the  outlay. 

By  Mr.  Quigley. 

Q.  What  is  the  name  of  this  one  right  opposite  the  court-holism? 
A.  That  is  the  Emigrant;  a  very  fine  bank. 

Q.  They  have  a  very  fine  building?  A.  Yes,  sir;  and  I  suppose! 
a  very  good  return  for  the  investment. 

Q.  Have  you  any  idea  how  much  that  cost?  A.  No,  sir;  thei 
return  would  show  it. 

By  the  Chairman.  jl 

Q.  The  bank  only  occupies  one  floor?     A.  Yes,  sir;  I  think  so. 
Q.  And  rents  out  the  rest  at  a  high  rate  to  the  tenants  abov( 
A,  I  think  so. 

By  Mr.  Quigley. 

Q.  Did  you  ever  see  any  report  from  the  Emigrant  bank  of  th« 
accumulation  from  unclaimed  deposits?  A.  I  am  in  the  habil 
of  looking  over  them  all,  but  I  can  not  remember  any  particular 
item  of  that  one;  I  presume  they  make  the  same  report  that  w< 
are  all  required  to. 

By  Mr.  Creamer. 

Q.  About  buildings,  would  not  that  be  better  illustrated 
reference  to  the  Dry  Dock  Savings  Bank  which  has  been  so  mucl 
talked  of  for  a  number  of  years  past?  A.  I  would  like  to  sal 
this,  that  I  look  upon  the  time  given  to  the  operation  of  th< 
savings  bank  as  the  most  philanthropic  that  I  give;  I  also  lool 
further  upon  the  character  of  the  savings  bank  depositor  as  one 
that  can  not  be  argued  with  much;  if  he  wants  his  money  yoj 
have  got  to  give  it  to  him,  and  you  must  keep  your  bank  in  a ; 


243 

Condition  that  commands  his  respect;  I  presume  that  is  very 
|>fteii  taken  into  consideration  in  investing  in  buildings;  I  do  not 
j<iippos<»  there  are  financial  institutions  anywhere  in  the  world 
I  hat  will  compare*  with  the  savings  banks  of  the  State  of  New 
(fork;  I  think  they  are  sound  to  the  core,  arid  I  think  it  is  mainly 
•wing  to  the  safeguard  thrown  ai*ound  them. 

By  Mr.  Ahearn. 

.  Do  you  believe  in  the  bill  introduced  husfc  year  giving  them 
|M»W<T  to  extend  in  vestments  to  other  States?  A.  I  think  so, 
simply  in  the  interest  of  the  depositor. 

By  Mr.  Quigley. 

Q.  Would  you  allow  them  to  speculate  outside?  A.  No,  sir; 
[hat  was  a  law  to  allow  us  to  invest  five  per  cent  of  the  amount 
>f  deposits,  for  instance,  in  the  bonds  of  Chicago,  Boston  or  Phila- 
lelphia;  it  was  growing  this  way  that  the  United  States  bonds 
disappearing,  and  we  have  more  money  than  is  wanted 
tthin  the  State,  and  we  wanted  authority  to  go  outside  of  the 
ite  and  make  some  investments,  equally  on  a  par  with,  our 


By  Mr.  Creamer. 

Q.  I  would  like  to  ask  what  can  you  suggest  that  will  increase 
le  dividends  to  the  depositors  in  savings  banks;  there  has  been 
complaint  for  some  years  past  as  to  the  amount  of  interest  you 
depositors.  A.  The  passage  of  the  bill  just  alluded  to  I 
would  help  the  interest  earning  power  of  the  banks  with- 
it  in  any  way  interfering  with  their  conservativeness. 

By  .the  Chairman. 

Q.  In  other  words,  a  wider  field  of  investment?  A.  Yes,  sir; 
lere  is  real  ignorance  on  the  part  of  the  community  as  to  the 
banks;  there  is  nob  a  single  person  connected  with  the 
Lvings  banks  in  their  management  except  those  employed  actually 
officers,  who  receive  remuneration;  I  and  my  twenty-six  col- 
ies  in  the  management,  except  one  or  two  who  have  to  be 
iere  every  day  —  the  financial  officers  who  receive  a  fair  emolu- 


244 

ment,  but  all  the  time  and  intelligence  given  to  the  managenn 
are  by  boards  of  trustees,  who  are  generally  men  past  the 
of  life  who  have  been  successful  in  their  own  business,  an  evidei 
to  the  community  that  they  are  cautious;  that  a.nd  the  prol 
elements  around  the  savings  banks  by  the  Legislature  lead  me 
believe  that  it  is  impossible  for  the  savings  bank  to  absolui 
fail;  they  may  be  in  the  time  of  panic  unable  to  realize  upon; 
their  securities,  and  people  may  have  to  wait  a  little  while,  but; 
it  would  be  absolutely  impossible  for  the  depositors  to  lose  unless  j 
there  is  fraud  on  the  part  of  the  trustees. 

By  Mr.  Quigley. 

Q.  If  that  bill  had  become  a  law  allowing  them  to  invest  in 
bonds  outside  of  the  State  of  New  York  would  not  that  prevent  j 
individuals  from  as  readily  getting!  money  from  banks?    A.  No, I 
sir;   if  you  read  the  law  you  will  find  that  only  five  per  cent  of 
the  savings  bank  deposits  is  applicable  to  put  into  the  seeuritiejl 
of  any  one  of  those  places1,  and  we  can  not  put  more  than  twenty! 
five  per  cent  in  the  whole  aggregate;  we  must  preserve  seventyl 
five  per  cent  for  the  State  of  New  York. 

Q.  You  mean  twenty -five  per  cent  in  the  aggregate  or  five  differ! 
ent  investments?  A.  You  can  not  take  first  of  all  more  than  fivi 
per  cent  of  the  deposits  in  any  one  city  or  town ;  I  wish  you  would! 
read  that  law,  because  it  received  a  great  deal  of  attention  on  thl 
part  of  the  savings  bank  presidents  met  in  convention,  and  I  thini 
with  the  exception  of  one  or  two  it  was  unanimously  approved  of! 

By  Mir.  Ahearn. 

Q.  Two-thirds  of  the  depositors  were  against  it;  they  claimed 
that  if  you  were  successful  that  you  would  do  the  same  with  thlj 
money  that  yon  are  doing  now,  putting  up  fine  buildings?  A.  N«j 
sir;  there  is  no  such  desire  at  all. 

Q.  That  is  what  they  claimed.  A.  Do  you  speak  of  depositor*] 
tihat  complained. 

Q.  Yes,  sir;  and  the  city  authorities  were  opposed  to  it.  A.  M 
great  many  of  the  city  authorities  did  not  understand  the  pifl 
visions  of  the  bill,  and  after  you  voted  upon  it  I  spoke  with  somej 


245 

the  gentlemen  who  were  representatives  in  Albany  and  they 
Id  me  if  they  knew  as  much  as  they  did  then  they  would  have 

jed  for  it;  I  hold  that  the  fear  of  the  authorities  here,  particu- 
rly  our  comptroller  here,  that  it  would  result  in  preventing  our 
vestment  in  the  bonds  of  the  city  of  New  York  was  absolutely 
•ong ;  there  was  no  such  idea  or  expectation. 

By  the  Chairman : 
Q.  There  was,  of  course,  a  spirit  of  selfishness  actuating  the 
icers  of  the  city  of  New  York  and  they  wanted  to  get  money 
low  as  possible,?  A.  And  they  always  have. 
Q.  And  they  thought  if  your  field  was  widened  they  might  have 
pay  three  and  a  half  instead  of  getting  it  for  two  and  a  half?  A. 
•t  me  ask  what  would  a  constituent  of  the  comptroller  say  if 
should  say  to  him  that  the  reason  why  we  can  not  pay  more  than 
vo  and  a-half  or  three  per  cent  on  his  money  is  that  the  Legis- 
ture  recognizing  the  ability  of  the  comptroller  to  judge  instead 
our  trustees,  prevented  us  from  having  a  larger  scope. 

By  Mr.  Quigley. 
Q.  Was  that  the  only  reason  you  wanted  a  larger  scope?    A. 
ntirely;  we  have  been  investing  in  government  bonds  and  they 
ill  soon  have  expired;  we  were  looking  for  something  to  take 
e  place  of  those  bonds. 

By  Mr.  Creamer. 
Q.  Does  the  non-taxation  of  trust  companies  generally  affect 
rings  banks  in  any  way?     A.  No,  sir;  not  the  savings  banks. 
Q.  What  is  the  cause  of  their  being  able  —  do  you  say  they 
3n't  interfere  with  the  interests  of  the  savings  banks?    A.  T 
m't  think  they  do;  trust  companies  are  of  great  use  to  the 
rings  banks;  if  you  take  up  their  reports  you  will  find  that  a 
>od  deal  of  the  idle  money  of  the  savings  banks  is  deposited 
the  trust  company  and  earning  an  income. 

Q.  Money  where  you  can  not  make  a  permanent  investment?  A. 
'e  must  keep  some  loose;  you  take  the  Bowery  Savings  Bank 
ith  its  forty  to  fifty  millions  deposits,  it  must  have  a  certain 


24:6 

amount  of  money  idle  ready  to  take  care  of  contingencies,  and 
they  have  that  in  a  trust  company,  and  they  pay  them  interest. 

Q.  Does  that  interfere  with  the  rate  of  dividends  of  the  banks?  I 
A.  No,  sir;  as  a  rule  we  get  a  good  rate. 

Q.  What  is  the  average?  A.  About  three  per  cent;  a  saving*-. 
bank  deposit  with  a  trust  company  is  better  than  an  ordinary; 
deposit  with  a  trust  company,  for  this  reason,  it  is  permanent;] 
it  is  there  to  take  care  of  a  contingency;  meanwhile  it  is  earning 
something  and  the  trust  company  has  a  right  to  consider  they  can  i 
bank  on  it  no  longer. 

Q.  Then  in  your  judgment  the  small  rate  of  interest  paid  by  a 
trust  company  does  not  have  a  tendency  to  keep  down  the  rate  o« 
interest  paid  by  savings  banks  to  the  depositors ;  does  the  operation,] 
of  the  trust  company  interfere  with  the  savings  banks  depositors?; 
A.  No,  sir;  it  is  a  great  benefit  to  the  banks. 

Q.  I  mean  as  to  the  relation  of  the  community  generally,  you  can 
not  see  where  there  is  any  interference?  A.  No,  sir;  it  is  a 
benefit  j  the  savings  bank  is  a  protected  depositor  with  the  trust* 
company  in  this  State;  in  case  there  is  an  accident  to  the  tri 
company  the  savings  bank  is  paid  first;  it  is  a  preferred  creditor. 

Q.  Now,  as  regards  taxation  of  trust  companies  and  their  ass* 
what  is  your  judgment;  are  you  connected  with  any  trust  company 
Yes,  sir;  I  am  a  trustee  of  the  United  States  Trust  Company. 

Q.  Are  you  connected  with  any  life  insurance  company?     A. 
am  not  connected  with  any. 

Q.  What  is  your  judgment  concerning  life  insurance  companies 
of  our  State;  are  they  not  as  well  able  to  pay  a  tax  as  in  other 
Statesi?  A.  I  presume  they  are;  1  don't  know  what  the  taxation 
Is  in  other  States. 

Q.  One-half  of  one  per  cent,  and  in  some  places  larger?  A.  I 
think  most  of  our  life  insurance  companies  here  are  mutual  com- 
panies; there  is  no  one  derives  any  benefit  except,  the  persons 
who  insure  them;  they  are  not  stork  companies;  Iliey  do  not  pay 
dividends;  if  1  am  insured  or  you  are  insured,  the  out  come  acorneN 
to  us; 'it  does  not  accrue  io  anybody  else;  I  don't  know  of  any  slock 
companies  in  the  life  insurance  1  nisi  ness  in  New  York. 


By  the  Chairman. 

Q.  The  policy  of  the  State  has  been  against  a  stock  system? 
L  Yes,  sir;  everything  goes  in  for  the  benefit  of  the  assured. 

By  Mr.  Tierney. 

Q.  As  regards  their  abilitv  to  pay  their  share  of  taxation?    A. 

think  there  is  no  doubt  of  it. 

Q.  You  think  they  should  pay  their  proportion?  A.  What- 
ver  you  can  show  to  be  their  share. 

Q.  Now,  the  banks  —  they  pay  their  share  of  tax  —  the  share- 
lolders?  A.  I  think  the  banks  pay  a  larger  share  of  tax  than 
my  other  interest  that  I  know  of;  the  bank  pays  its  tax  upon 
;he  assessed  value,  and  the  assessed  value  is  usually  what  they 
;erm  the  market  value,  and  that  market  value  very  often  predi- 
cated upon  what  is  termed  the  good  will. 

Q.  Do  you  not  think  than  the  banks  —  that  their  stability  in 
:he  State  of  New  York  is  owing  much  to  their  readiness  to  com- 
ply with  the  law  as  regards  their  obligations  to  the  national 
government,  State  government  and  local  government?  A.  I  do 
lot  think  if  it  was  left  to  them  that  they  would  like  to  pay  the 
•ate  of  taxation  at  which  tliey  are  taxed,  but  their  charters  compel 
iieni  to  make  their  returns,  and  they  are  based  upon  sworn 
statements  and  there  is  no  escape. 

Q.  They  as  you  say  no  doubt  would  like  to  keep  company  with 
:hose  not  taxed?  A.  They  would  like  to  be  relieved  of  a  portion 
)f  the  law,  as  I  say;  I  think  the  banks  of  the  State  of  New  York 
ire  taxed  more  in  proportion  to  the  absolute  value,  the  market 

Lue  of  their  stocks,  than  any  other  interest  that  I  know  of, 
ind  I  think  that  is  not  growing  out  of  the  desire  of  the  bank 
;o  be  so  treated,  but  the  compulsion  of  the  Bank  Department, 
I  Which  compels  them  to  make  returns  upon  which  those  taxes 
uv  levied. 

!  Q.  The  duties  of  a  bank  director  are  far  more  responsible  and 
bnerous  than  the  director  of  a  life  insurance  or  trust  company? 
A.  I  think  they  are;  our  actions  are  more  controlled  by  law,  and 
Binder  the  responsibility  resting  upon  us  in  case  we  overstep 
that  authority. 


248 


I 


By  the  Chairman. 

Q.  They  are  both  liable  for  punishment  for  misconduct? 
Yes,  sir. 

By  Mr.  Creamer. 

Q.  The  opinion  is  that  if  our  banks  can  pay  a  fair  equitabl 
tax  other  money  institutions  should  also  pay  their  share? 
The  banks  enjoy  privileges  which  others  do  not;  you  will  seldom 
find  a  bank  paying  interest  upon  deposits;  for  instance,  if  I  have 
a  bank  account  in  a  trust  company  I  receive  interest;  if  I  have 
an  account  with  a  bank  I  receive  no  interest  from  the  bank;  at 
the  same  time,  if  I  want  money  upon  my  note  and  go  to  the  bank, 
I  expect  to  get  it;  I  have  no  claim  upon  the  trust  company. 

Q.  But  often  the  rate  allowed  by  trust  companies  is  very 
small?  A.  It  is  generally  predicated  upon  what  the  trust  com- 
pany considers  the  value  of  your  account. 

Q.  And  a  good  deposit  in  any  bank  the  depositor  generally 
receives  favors  that  will  compensate  him  for  any  loss  of  interest 
that  he  might  get  from  a  trust  company?  A.  We  all  want  bank 
accounts;  it  is  very  convenient  to  operate  our  business  through 
them;  they  expect  to  derive  benefits  and  we  expect  to  derive 
benefits. 

Q.  Now,  as  regards  the  taxation  of  corporations  generally,  have 
you  known  of  any  cases  where  they  have  been  driven  from  this 
State  on  account  of  threatened  taxation?  A.  I  don't  think  I 
have;  I  can  not  recall  any  particular  instance  at  the  moment;  as 
I  said  before,  I  think  a  great  many  corporations  have  been  organ- 
ized in  different  States  because  of  the  different  cost  attached  to 
incorporation  here. 

Q.  You  are  an  officer  in  the  chamber  of  commerce  and  produce 
exchange?  A.  I  am  a  vice-president  of  the  chamber;  I  have  been 
vice-president  of  the  produce  exchange. 

Q.  You  do  not  recall  any  corporation  having  been  driven  out 
of  this  State  on  account  of  taxation  on  personal  property?  A. 
T  do  not  remember  any. 

Q.  What  would  be  your  judgment  concerning  deduction  for 
debts  for  personal  property  on  non-residents  who  were  supposed 


249 

j  to  have  left  the  State  with  a  view  to  avoiding  all  taxation?  A.  I 
I  presume  they  would  carry  their  personal  property  with  them. 

Q.  It  has  been  discussed  here  as  to  whether  those  who  leave 
[the  State  with  a  view  to  avoid  the  payment  of  taxes,  whether 
I  when  they  do  appear  to  avoid  all  taxation,  or  at  least  the  larger 
rate  imposed  in  this  county,  whether  when  they  do  appear  at  the 
tax  office  they  should  not  be  allowed  equal  privileges  with  resi- 
dents of  the  State  as  regards  making  a  deduction  on  any  capital 
they  admit  in  their  possession?  A.  I  think  it  would  be  just  and 
equitable  in  all  instances  to  allow  a  man  to  deduct  his  debts  from 
the  gross  value  of  his  assets. 

Q.  From  personal  property  only?    A.  Yes,  sir. 

Q.  From  real  estate?  A.  No,  sir;  real  estate  is  entirely 
different. 

Q.  As  regards  this  popular  error  concerning  double  taxation  of 
real  estate,  when  you  tax  the  mortgages  as  well  as  the  mortgagor, 
do  you  share  in  that  opinion  with  others  as  to  its  not  being  a  just 
tax  because  it  is  a  double  tax?  A.  I  think  it  is  an  unjust  tax. 

Q.  Is  it  a  double  tax?    A.  I  think  it  is. 

Q.  Isn't  it  rather  two  persons  paying  one  tax  instead  of  one 
paying  all?  A.  No,  sir;  I  think  not. 

Q.  Suppose  the  annual  budget  of  this  county  is  next  year 
75,000,000?  A.  That  is  all  they  are  to  collect;  no  more  and  no 
less. 

Q.  How  can  there  be  70,000,000  imposed,  no  matter  how  large 
the  sum  is  placed  upon  the  tax  book  of  real  or  personal  property: 
if,  for  instance,  the  amount  of  the  mortgages  was  placed  upon 
the  tax  books  as  well  as  the  value  of  the  real  estate,  that  would 
reduce  the  rate  of  taxation  on  the  real  estate  owner,  and  there- 
fore would  be  a  reduction  of  the  tax  on  the  real  estate,  and  adding 
it  on  to  the  owner  of  personal  property;  that  would  not  be  double 
taxation?  A.  My  idea,  which  I  tried  to  make  plain  to  you  iirst, 
was  this,  that  if  you  tax  the  mortgage  this  year  you  might  get  it, 
but  next  year  the  mortgage  wouldn't  be  in  existence;  if  it  was 
policy  to  call  in  the  mortgage  it  would  be  called  in,  and  the  result 
would  be  it  would  reduce  the  value  of  the  real  estate;  it  would 
32 


250 

act  two  ways;  it  would  hurt  the  man  who  owned  the  real  estate 
and  would  destroy  the  value  of  it  as  a  means  of  raising  revenue 
to  the  city,  because  it  would  reduce  its  value. 

Q.  Take  it  with  the  rate  one-half  of  one  per  cent  on  mort 
gages;  you  have  said  in  your  judgment  that  won't  serioi 
interfere  with  the  borrowing  or  loaning  of  money?  A.  Whal 
said  was  that  under  any  circumstances  a  tax  upon  a  mortgage 
would  be  an  additional  tax  upon  the  real  estate,  but  that  the 
lower  that  you  fixed  the  tax  upon  the  mortgage  the  less  the 
amount  of  interest  and  the  volume  of  the  tax  including  the 
interest  would  be  to  the  owner  of  the  real  estate;  if  you  leave  it 
as  it  is  now,  an  uncertain  quantity,  entirely  at  the  discretion  or 
diligence,  whatever  you  please  to  call  it,  of  the  assessor  in  getting 
at  the  present  tax,  under  any  circumstances,  it  is  in  my  judg- 
ment that  whatever  rate  you  are  fixing  upon  a  mortgage  you 
absolutely  fix  that  as  an  additional  rate  upon  the  real  estate. 

Q.  In  view  of  those  facts,  do  you  not  think  that  personal  prop- 
erty embraced  in  mortgages  should  pay  a  reasonable  amount  of 
taxation  towards  the  support  of  government;  you  have  already 
stated,  I  believe,  that  one-half  of  one  per  cent  would  not  be 
onerous?  A.  I  did  not  state  it  exactly  in  that  way;  do  I  under- 
stand your  question;  do  you  mean  that  the  real  estate  should 
be  assessed  to  the  owner  of  the  real  estate  less  the  mortgage? 

Q.  No,  sir;  let  the  assessment  go  on  as  it  is  now,  just  the  same, 
fifty  per  cent  of  its  actual  market  value  or  its  actual  value?  A. 
That  is  an  unknown  quantity;  now,  my  house  that  I  pay  my  tax 
upon  I  think  I  pay  ninety  per  cent  of  its  market  value. 

Q.  You  reside  where?  A.  In  Brooklyn;  I  think  I  pay  ninety 
per  cent  of  its  market  value;  as  to  the  question,  do  I  think  that 
the  tax  assessed  upon  real  estate  and  then  a  tax  assessed  upon 
the  mortgage  is  a  single  tax  or  a  double  tax;  I  consider  it 
a  double  tax  and  an  unfair  tax. 

Q.  You  pay  on  $90,000?    A.  No,  sir;  ninety  per  cent  of  t 
cost,  I  said. 

Q.  What  is  the  tax  rate?  A.  Suppose  I  bought  that  house 
for  $50,000;  I  am  assessed  for  $45,000;  suppose  I  bought  thai 


251 

house  and  gave  back  $25,000  mortgage  on  it;  before  I  started 
in  upon  this  deal  the  city  received  a  tax  of  ninety  per  cent  upon 
f.~iO,000;  now,  after  I  had  completed  the  deal  the  city  would 
receive  this  ninety  per  cent  upon  the  $50,000  and  place  the  same 
rate  of  taxation  upon  $25,000. 

Q.  Hut  the  city  don't  want  to  receive  more  than  it  should;  1hal 
is  whore  the  mistake  is  made;  suppose  all  the  tax  is  raised  in 
the  county  from  real  estate  and  mortgages  on  real  estate,  and  that 
your  piece  of  property  say,  in  round  numbers,  is  worth  §1  (-0,000, 
and  there  is  a  mortgage  of  $50,000  on  it;  now,  if  ninety  on  the 
hundred  was  the  rate  —  if  you  are  assessed  on  that  and  tin* 
holder  of  the  mortgage  is  also  assessed,  yon  see  you  have  more 
money  than  you  require;  therefore,  the  money  that  is  raised  from 
the  mortgage  is  deducted  in  a  revised  tax  rate  from  your  house 
assessed  at  ninety  per  cent,  and  the  rate  would  be  so  much  less 
than  the  amount  raised  in  the  mortgage;  therefore,  where  is  the 
double  tax?  A.  Perhaps,  you  have  got  the  theory  of  the  thing 
and  I  have  got  the  practice  of  the  thing. 

Q.  Suppose,  for  instance,  that  your  piece  of  property  was  mort- 
gaged and  the  mortgagee  was  paying  his  share,  then  the  city 
would  not  require  it  from  you;  they  would  deduct  it  in  the  next 
annual  budget;  where  is  the  double  tax?  A.  I  find  that  though 
the  volume  of  taxable  property  is  increasing  our  rate  of  taxation 
remains  the  same;  the  practical  side  of  it  is  mine;  the  theorHiral 
side  of  it  is  yours. 

IQ.  For  instance,  if  in  the  county  of  Kings,  the  amount  of  the 
mortgages  on  the  realty  there  is  the  same  as  it  is  held  to  be  in 
this  county  and  other  counties,  fully  equal  to  the  assessed  value 
of  the  property,  and  all  those  mortgages  were  placed  on  the  Kings 
county  tax-list,  that,  of  course,  would  reduce  the  rate  of  taxation 
from  two  dollars  and  seventy-five  cents  to  one-half  of  what  it  is 
to-day;  it  is  a  double  tax  only  in  the  sense  that  the  mortgagor 
and  the  mortgagee  both  pay  where  now  but  the  nioHgagor  pays; 
there  is  no  double  taxation  in  that;  there  is  a  reduction  of  taxa- 
tion for  the  owner  of  the  property,  and,  therefore,  wherever  (here 
in  a  reduction  of  taxation  there  is  a  benefit  to  the  owner  as 


252 

well  as  to  whoever  rents  the  property?    A.  That  has  not 
the  experience,  Mr.  Counselor. 

Q.  As  regards  the  tax  on  inheritances,  what  is  your  opinio] 
as  to  the  operation  of  that  law  —  the  collateral  inheritance  tax' 
A.  I  believe  in  it  myself  thoroughly. 

Q.  And  also  tbe  direct  inheritance  tax?  A.  I  believe  in  the 
inheritance  tax. 

Q.  Would  you  modify  it  in  any  respect  as  regards  the  amount 
to  be  taxed;  it  is  now  limited  to  property  above  $10,000;  would 
you  increase  or  decrease  that  amount;  there  has  been  a  difference 
of  opinion  as  regards  the  effect  of  that  law  and  what  the  views 
of  citizens  were  in  regard  to  it?  A.  I  think  the  provision  is  a 
fair  one  as  it  stands  now. 

Hy  the  Chairman. 

Q.  Some  of  those  city  officials  that  insist  that  two  and  a  half 
per  cent  is  sufficient  earning  for  your  savings  bank  money  do 
not  hesitate  to  get  five  per  cent  for  collecting  this  inheritance 
tax;  what  do  you  think  of  the  liberality  of  the  spirit  in  that  con- 
nection? A.  I  don't  think  it  is  liberality.  ;! 

Q.  In  other  wordsi,  they  want  the  use  of  ibKeir  money  for  two 
and  a  half  per  cent  for  a  term  of  years,  and  for  the  mere  collec- 
tion of  this  money  passing  through  their  hands  for  a  very  short 
period  they  want  five  per  cent  for  the  trouble  of  collecting  it;  do 
you  think  they  exhibit  a  great  degree  of  liberality?  A.  No, 
sir. 

Q.  Do  you  not  think  that  five  per  cent  for  the  collection  of 
that  tax  is  altogether  too  much?  A.  It  is  not  the  collection  of  it; 
it  is  the  contribution  from  the  State  to  the  maintenance  of  the 
government. 

Q.  I  am  talking  now  about  the  percentage  that  the  officer  getB 
for  the  mere  handling  of  it.  A.  That  is  outrageous;  I  did  not 
understand  the  counsellor's  question;  I  thought  he  meant  the 
levying  of  the  tax  for  the  government's  purposes. 

Q.  That  is  what  he  meant;  my  question  went  to  the  fee  of  the 
officer  who  collects  the  tax.  A.  There  is  no  question  about  that; 
it  is  outrageous. 


253 

Q.  You  think  that  without  doing  any  injustice  to  an  officer 
already  salaried  tha/t  percentage  might  be  cut  down?  A.  I  do. 

Q.  The  purposes  of  this  inquiry  as  you  may  have  learned  from 
the  resolution  are  as  to  the  propriety  of  modifying  the  present 
laws  relating  to  taxation,  assessment  and  interest,  so  far  as  they 
affect  the  agricultural,  manufacturing,  commercial,  labor,  banking 
and  other  interests  of  the  State;  now,  I  think  .all  the  witnesses 
who  have  preceded  you  on  the  witness  stand  have  united  in  the 
expression  that  real  estate  should  be  relieved  from  taxation  for 
general  State  purposes,  if  means  can  be  devised  by  the  Legislature 
for  the  support  of  the  government  otherwise;  what  do  you  think 
of  that  proposition?  A.  I  think  it  would  create  a  great  feeling 
of  satisfaction,  and  it  would  do  away  with  a  great  many  errors 
that  creep  into  this  whole  question;  I  think  it  would  be  a  great 
benefit  if  the  State  government  could  be  maintained  by  taxes 
outside  of  this  question  of  real  or  personal  taxation,  and  leave 
for  the  localities  themselves  in  which  the  people  live  to  decide 
those  questions  of  taxation  from  the  real  estate  or  personal 
standpoint. 

Q.  That  would  do  away  with  all  this  question  of  equalization? 
A.  Yes,  sir;  it  would  do  away  with  a  great  deal  of  this  haze  that 
really  surrounds  it  now;  if  the  State  should  obtain  its  taxes 
through  the  inheritance  tax  and  through  coiporation  that  derive 
their  existence  and  benefits  and  favors  from  the  State,  then  leav- 
ing the  other  questions  of  local  taxation  to  the  local  authorities, 
it  would  be  a  great  point  gained. 

Q.  Can  you  suggest  any  additional  channel  through  which 
revenue  could  be  obtained  for  general  State  purposes  if  real 
estate  is  to  be  relieved  from  a  general  tax?  A.  I  stated  that  I 
thoroughly  believed  in  the  inheritance  tax;  as  I  look  upon  it  it 
is  not  onerous  to  the  persons  receiving  something  that  they 
have  not  earned  themselves;  it  is  something  that  they  have 
had  no  direct  influence  in  the  creation  of,  and  it  is  absolutely  all 
profit  to  them. 

Q.  Would  you  be  in  favor  of  increasing  it?  A.  I  think  I 
would;  the  more  I  have  thought  of  that  the  more  tba<t  idea  gains 


254: 

upon  iny  mind,  and  I  do  not  believe  it  would  meet  with,  serioi 
objection  when  thoroughly  considered. 

Q.  Can  you  suggest  any  channel  through  which  taxes  for 
support  of  the  general  government  could  be  collected  from  whi< 
nothing  is  collected  now?  A.  This  question  places  us  entirely 
outside  of  the  line  of  my  own  business  life,  and  I  have  not  given 
it  consideration ;  •!  must  therefore  confess  inability  to  give  you 
information  that  you  ask  for. 

Q.  My  purpose  in  asking  the  question  is   this:    If   we  are 
relieve  real  estate  from  contributing  towards  the  expense  of 
gjeneral  State  government,  we  must  get  additional  revenues 
other  sources,  therefore  I  ask  you  as  an  experienced  business  man 
if  you  can  suggest  any  other  channel  through  which  we  could 
derive  additional  revenues;    is  there  any  tax  upon  State  banks 
for  local  purposes  now  that  might  be  diverted  from  the  local . 
channels  into  the  State  treasury?    A.  I  don't  think  there  are, 

Q.  Then  you  are  unable  at  the  present  moment  to  suggest 
any  other  means  for  the  collection  of  taxes?  A.  Have  you  any 
idea  what  the  volume  of  that  would  be  in  the  aggregate? 

Q.  No;  I  have  not. 

By  Mr.  Creamer. 

Q.  As  regards  the  amount?    A.  Yes,  sir. 

Q.  Twenty-six  hundred  million  the  assessors  say.     A.  I  mean, 

for  instance,  if  you  relieve  real  estate  from  the  State  portion  of  the 

i 

tax  what  would  be  the  volume  of  the  amount  you  would  have  to 
raise  as  an  equivalent? 

By  Mr.  Hamilton. 

Q.  The  total  amount  contributed  by  the  various  counties  for 
Stalo  purposes  was  over  $5,000,000,  of  which  real  estate  paid  hi 
the  i*eighborhood  of  eighty -nine  per  cent;  there  was  an  amount 
raised  in  excess  of  the  needs  of  the  State,  and  of  that  amount  some 
eighty-nine  per  cent  was  contributed  by  the  tax  upon  real  estate — 
about  four  millions  and  a  half?  A.  What  was  the  amount  raised 
from  the  inheritance  tax? 


255 

Q  The  receipts  for  the  year  1891  in  the  Comptroller's  report 
in  1802,  It  then  being  simply  what  is  known  as  the  collateral 
inheritance  tax,  and  not  as  broad  as  it  is  to-day  was  $890,267;  it 
is  estimated  thai  with  the  direct  succession  tax  the  amount  will 
ba  largely  increased,  all  hough  the  direct  succession  tax  dors  not. 
include  the  tax  upon  real  estate,  the  $10,000  being  solely  confined 
to  personal  property?  A.  Believing  as  I  do  that  the  inheritance 
tax  is  a  just  and  fair  one  and  that  it  might  be  made  a  means  very 
much  like  the  English  way  <>f  piecing  out  the  budget  by  the  income 
tax;  the  direct  inheritance  tax  here  is  very  moderate,  and  it  seems 
to  me  that  could  be  increased  materially  without  being  onerous 
to  anybody  where  you  relieve  the  very  moderate  amounts  coming 
to  persons  in  moderate  circumstances. 

By  the  Chairman. 

Q.  You  think  it  might  increase  above  one  per  cent  and  yet  not 
to  be  a  hardship?  A.  Yes,  sir;  in  Great  Britain  I  think'it  Is  live 

Q.  You  think  we  might  increase  the  direct  inheritance  tax 
to  two  and  a  half?  A.  I  do. 

Q.  Do  you  recommend  that?  A.  If  I  was  in  a  position  like  you 
I  believe  from  the  light  I  have  now  I  would  be  in  favor  of  looking 
to  that  for  a  means  of  income. 

Q  From  the  standpoint  of  relieving  real  estate  from  taxation 
for  State  purposes,  if  you  were  searching  around  for  something 
you  would  recommend  the  idea  of  increasing  the  direct  inheritance 
tax  to  two  and  a  half  per  cent?  A.  Yes,  sir. 

By  Mr.  Hamilton. 

Q.  And  including  also  real  estate?  A.  Yes,  sir;  it  must  be  on 
all;  it  seems  a  fair  way  and  also  a  way  that  everybody  has  to  pay 
his  proportion;  there  is  no  evading  it. 

By  the  Chairman. 

Q.  You  said  that  you  favored  the  tax  upon  corporations?  A. 
I  favor  a  tax;  I  don't  believe  in  corporations  relieving  themselves 
of  taxation;  of  course,  T  mean  a  tax  that  is  in  proportion  to  the 


256 

benefits  they  receive  from  rights  derived  from  the  State  and  tb.< 
protect  ion  of  the  State. 

Q.  What  do  you  say  of  I  he  lax  of  one-eighth  of  one  per  cemi 
do  you  Ihink  Iliai  is  loo  Mgh?     A.  My  idea  is  this:  That  I  wouli 
try  to  get  the  corporation  and  I  would  keep  the  tax  so  low  untm 
I  got  the  corporation. 

Q.  Then  you  would  tax  them  after  you  got  them;?  A.  I  woulrf 
tax  them  in  proper  (ion  to  (he  benefit;  you  would  very  soon  lind 
out  what  that  is. 

By  Mr.   Creamer. 

Q.  Do  you  think  that  a  law  that  would  work  well  in  Pennsylvanii| 
and  Massachusetts  as  regards  corporations  might  be  tried  nere  in» 
safety?  A.  If  I  knew  what  these  were  I  would  be  willing 
express  an  opinion;  I  would  not  tax  them  in  their  inception  to  pie-| 
vent  them  organizing;  I  would  rather  make  the  tax  in  such  a  pro- 
portion as  to  ask  them  to  the  State  of  New  York  and  place  themd 
under  your  own  supervision;  imaginary  lines,  you  know,  are  very] 
easily  crossed. 

Q.  With  regard  to  the  incorporation  of  those  companies?  AJ 
Yes,  sir. 

Q.  Your  opinion  is  that  a  company  can  not  afford  to  pay  one- 
eighth  of  one  per  cent  on  a  capital  of  say  $200,000  must  be  very! 
short  of  funds?  A.  They  ought  not  to  be. 

Q.  There  has  got  to  be  a  line  drawn  somewhere  as  to  the 
privilege  of  forming   companies?    A.  If  you  are  going   out  tc 
shop  and  find  two  stores  equally  advantageous,  one  charges  yorj 
one  price,  and  the  other  charges  the  other,  you  will  seek  the  one! 
Mi  at  charges  least. 

Q.  What  is  your  judgment  concerning  the  incorporation  oil 
this  company  in  Jersey  City  doing  business  in  the  State  of  Ne^vl 
York  and  organized  in  the  State  of  New  Jersey  recently?  A I 
Which  do  you  refer  to? 

Q.  I  do  not  know;  it  is  a  corporation  recently  organized  there! 
including  a  safe  deposit  company,  to  have  a  branch  in  the  Statcl 
of  New  Jersey  to  represent  corporations  doing  business  in  thiil 
State,  incorporated  under  the  laws  of  New  Jersey,  to  give  them  tl 


257 

usiness  standing  in  that  State,  principally  to  avoid  taxation 
r  liability  under  our  laws  not  existing  under  the  laws  of  New 
ersey;  have  you  noticed  the  existence  of  that  corporation?  A. 
To,  sir. 

Q.  As  regards  an  income  (^x  —  what  do  you  think  of  an  income 
ax  as  being  a  solution  of  taxation  of  personal  property  as  has 
een  suggested;  what  is  your  judgment  concerning  the  effect 
n  income  tax  would  have?  A.  I  think  it  would  be  exceedingly 
nfortunate  for  the  State  to  have  that;  if  you  have  one  which 
s  national  in  its  character  and  'drawing  an  imaginary  line  does 
tot  prevent  its  being  operative,  it  might  answer,  but  if  you  mean 

State  tax  it  only  means  the  building  up  of  adjacent  States 
vhere  they  do  not  have  it;  you  would  be  depriving  the  State  of 
ew  York  of  that  portion  of  its  citizenship  that  spends  a  great 
cal  of  money  here  in  New  York;  you  can  not  control  private 
jeisonal  property;  it  will  get  away;  it  is  not  the  question  of  its 
ight  or  wrong;  it  is  an  inquisitorial  tax  which  is  exceedingly 
inpopular;  it  will  be  evaded  by  unconscientious  men  and  it  will 
Irive  away  the  conscientious  ones. 

Q.  I  ask  you  now  as  to  whether  or  not  a  change  should  not 
made  now  as  regards  the  question  of  assessing  personal  prop- 
krty?  A.  You  must  bear  in  mind  that  we  are  the  Empire  State 
or  all  that;  the  State  of  New  York  is  not  dead;  I  would  like  to 
epeat  what  I  said  before  that  in  this  question  of  real  estate 
here  is  no  injustice  done  to  the  owner  for  he  purchases  it  with 
he  understanding  that  there  is  a  tax  against  it,  and  just  the 
ame  with  insurance,  just  as  much  as  there  is  to  keep  it  in  repair. 

Q.  I  understand  you  to  say  that  you  are  unqualifiedly  opposed 
;o  the  taxation  of  personal  property?  A.  I  am;  I  believe  that  it 
B  detrimental  to  the  interests  of  the  locality. 

Q.  For  all  local  purposes  at  least  real  estate  should  bear  the 
mrden  of  taxation?  A.  Yes,  sir;  and  the  corporations  that  are 
enjoying  the  benefits. 

Q.  Of  course,  corporations  having  local  franchises  ougjit  to 
pay?  A.  Yes,  sir. 


258 

Q.  Are  you  in  favor  of  lowering  the  legal  rate  of  interest;  the 
agricultural  people  of  the  Slate  seein  to  demand  that  the  legal] 
rate  of  interest  be  lowered  from  six  to  five  per  cent;  are  you  in! 
favor  of  keeping  it  as  it  is  or  lowering  it?  A.  I  am  not  in  favtiil 
of  lowering  it;  the  meaning  of  lowering  it  is  to  send  capital  off, 
and  the  result  would  be  very  disastrous;  the  question  of  lowering 
or  raising  does  not  benefit  the  country  at  all;  money  will  always 
find  its  level. 

Q.  We  must  out  of  respect  for  the  farmer  presume  that  he 
knows  what  he  wants;  he  says  he  wants  a  lower  rate  of  interest] 
and  Avants  it  fixed  at  five  per  cent;  I  want  to  get  your  judgment' 
as  to  the  wisdom  of  that  reduction?  A.  I  think  it  would  be  very 
unwise;  if  the  State  of  New  Jersey  can  give  me  six  per  cent! 
when  the  State  of  New  York  will  only  give  me  five  my  capital* 
will  go  to  New  Jersey. 

Q.  Won't  it  be  a  benefit  to  the  farmer?  A.  No,  sir;  I  don't 
see  how  it  could  be. 

John  A.  Mason,  called  as  a  witness,  being  duly  sworn,  testified 
as  follows: 

By  Mr.  Creamer. 

Q.  You  are  a  State  assessor?    A.  Yes,  sir. 

Q.  How  long  have  you  been  a  member  of  the  State  Board  of 
Assessors?  A.  I  qualified  on  the  second  day  of  July  of  the 
present  year. 

Q.  Had  you  any  experience  previously  in  connection  with  this 
subject?  A.  No  particular  experience. 

Q.  Except   a   general   knowledge?         A.    Except    a   general 
knowledge. 

Q.  What  has  been  the  result  of  your  experience  since  as  regard; 
the  assessing  of  personal  property,  whether  it  has  driven  capital 
out  of  the  State,  either  corporate  or  individual?  A.  I  ha/e  not 
secured  any  special  knowledge  with  reference  to  that  branch  oft 
the  subject  of  taxation,  and  T  have  simply  my  personal  opinion; 
the  duties  of  State  assessor  have  not  as  yet  brought  me  in  con- 


259 

I  tact  with  the  industries  of  the  State  or  the  question  so  as  to 
give  me  specific  information. 

Q.  You  have  read  the  resolution  creating  this  committee?  A. 
Yes,  sir. 

Q.  Can  you  give  the  committee  any  information  in  compliance 
with  that  resolution?  A.  My  opinion  is,  it  would  be  conducive 
to  the  prosperity  of  the  State  if  personal  taxes  were  abolished, 
except  such  as  may  be  paid  by  corporations  which  receive  their 
life  and  value  from  franchises. 

Q.  Does  that  include  joint-stock  associations  and  firms?  A. 
Joint-stock  associations  engaged  in  ordinary  business. 

Q.  You  would  exempt  those?    A.  Yes,  sir. 

Q.  When  you  say,  tax  corporations,  what  do  you  mean,  incor- 
porated by  special  law  or  under  the  general  law?  A.  Incor- 
porated by  the  law  of  the  State  giving  to  the  corporation  fran- 
chises or  special  privileges  which  make  the  corporations  institu- 
tions of  value. 

Q.  Would  you  include  also  joint-stock  associations  without 
being  incorporated;  there  are  such  in  the  State  —  business 
associations  making  large  profits  even  beyond  those  incorporated? 
A.  I  think  that  capital  employed  in  productive  industries  or  as 
a  convenience  to  trade  and  commerce,  whether  it  be  the  capital 
of  individuals  or  corporations,  should  be  relieved  as  far  as  possible 
from  burdens  of  taxation. 

Q.  Then  what  would  ther.3  be  to  tax?  A.  Corporations  which 
operate  on  franchises  giving  to  them  special  privileges — rail- 
roads, gas  companies,  telephone  and  telegraph  companies. 

Q.  Telegraph  companies?    A.  Yes,  sir. 

Q.  How  would  you  tax  telegraph  companies?  A.  Upon  their 
earnings. 

Q.  At  their  principal  office  in  every  county,  or  how?  A.  Upon 
their  earnings  within  the  State;  upon  their  gross  earnings;  in 
other  words,  it  seems  to  me  that  whatever  may  be  given  by  the 
people  to  a  corporation  in  the  way  of  a  special  privilege  should 
be  paid  for  by  the  corporation,  but  that  capital  employed  in 


260 


ordinary  every  day  pursuits,  open  to  every  day  competition,  should1 
be  relieved  as  far  as  possible  from  taxation. 

Q.  Have  you  read  the  tax  laws  generally  during  the  last  ten 
or  twelve  years?    A.  No,  sir;  not  during  the  last  ten  or  tweb 
years. 

Q.  I  mean  have  you  read  during  the  last  six  months  since  yoi 
have  been  in  office  the  laws  covering  that  period?  A.  To  somi 
extent,  yes,  sir. 

Q.  What  is  your  opinion  as  to  the  exemptions  placed  upon  the 
statute  books  from  time  to  time  to  exempt  from  all  taxatioi 
such  as  life  insurance  companiesj  express  companies  and  oth< 
joint-stock  associations?  A.  It  seems  to  me  that  an  expi 
company  should  pay  a  tax  to  the  State;  the  nature  of  its  busiiu 
does  not  admit  of  that  open  competition  which  is  possible  in 
life  insurance  companies. 

Q.  As  regards  those  laws  exempting  those  others  which  I 
just  enumerated?    A.  I  think  they  are  wise. 

Q.  In  exempting  them?    A.  Yes,  sir. 

Q.  Would  you  exempt  a  trust  company?  A.  Yes,  sir;  its 
capital  is  used;  it  is  a  convenience  to  trade  and  commerce,  andi 
whatever  is  conducive  to  trade  and  commerce  adds  to  the  general] 
prosperity. 

Q.  Should  not  general  prosperity  contribute  its  share  towards^ 
the  support  of  the  State;  the  government  guarantees  its  pros- 
perity? A.  It  seems  to  me  that  is  done  by  making  real  estate] 
the  basis  of  taxation  —  real  estate  and  the  improvements. 

Q.  What  benefit  is  it  to  real  estate  to  have  a  trust  company 
exempt  from  taxation,  particularly  real  estate  used  for  dwelling 
purposes?  A.  Whatever  adds  to  the  volume  of  commerce  gives. 
it  seems  to  me,  an  increased  value  to  real  estate. 

Q.  In  what  way?  A.  By  adding  to  the  population;  if  I  ma; 
explain  myself  —  I  think,  so  far  as  I  have  studied  the  subject 
that  if  personal  property  should  be  exempt  from  taaxliou,  i 
would  result  in  greater  prosperity  to  the  city  of  New  York,  t<j 
the  city  of-  Buffalo,  and  to  other  centers,  by  attracting  herij 
capital  which  would  seek  employment  in  various  ways. 


261 

Q.  Exempt  personal  property?    A.  Yes,  sir. 

Q.  Even  if  the  cities  of  Philadelphia  and  Boston  impose  a 
lartie  personal  tax?  A.  It  seems  so  to  me;  if  it  would  be  advan- 
tageous it  would  not  seem  to  me  to  be  a  sufficient  reason  why 
we  should  not  possess  ourselves  of  that  advantage  because  it  is 
not  done  by  Boston  or  Philadelphia. 

Q.  Do  you  think  that  we  should  take  advantage  of  the  situa- 
tirn?  A.  I  think  so;  I  was  not  aware  of  it  until  you  called  Mr. 
Orrs  attention  to  the  fact;  it  occurred  to  me  that,  notwithstand- 
ng  our  prominence  in  the  Union,  we  are  fifth  with  reference  to 
personal  property  that  pays  a  tax;  it  occurred  to  me  that,  perhaps, 
one  reason  why  we  are  beyond  the  other  States  in  population 
and  wealth  is  that  personal  property  in  this  State  has  not  been 
taxed  as  it  has  been  in  the  other  States. 

Q.  That  is  one  reason?  A.  I  do  not  know  that  it  is,  but  that 
occurred  to  me ;  I  have  not  looked  into  the  subject ;  !  did  not  know 
of  that  interesting  fact  until  you  brought  it  out. 

Q.  The  county  of  Kings  has  increased  more  in  proportion  than 
STew  York,  while  the  amount  of  their  personal  property  has 
decreased;  would  not  that  rather  interfere  with  your  theory? 
A.  I  think  not;  Brooklyn  is  growing  more  rapidly  than  New  York 
relative  to  population  than  it  did  ten  years  ago,  perhaps,  on 
account  of  the  better  facilities  for  travel  to  reach  the  suburbs  — 
the  widening  of  the  inevitable  area  for  homes. 

Q.  Then  this  large  wealth  recently  exhibited  to  the  public 
gaze  of  certain  citizens  entirely  invested  in  personal  property  you 
would  rather  exempt?  A.  Except  so  far  as  it  came  from  corpo- 
rations which  receive  from  the  State  franchises  carrying  special 
)rivileges  which  are  of  great  value. 

Q.  Nearly  all  of  those  corporations  of  great  value  are  not 
special  privileges;  the  Western  Union  Telegraph  Company  is  organ- 
zed  under  the  general  laws  of  this  State;  the  organization  of  the 
Manhattan  Elevated  Railroad  Company  is  not  a  special  privilege; 
it  is  organized  under  the  general  law  of  the  State;  there  is 
nothing  special  about  that,  and,  therefore,  they  would  not  come 


within  your  ideas?    A.  I  think  so;  they  are  given  the  use  of  tl 
streets. 

Q.  Not  the  Manhattan  elevated;  you  will  find  on  the  aggn 
gate  the  capital  of  those  three  companies,  the  Manhattan,  the 
Metropolitan  and  the  New  York,  that  the  taxation  on  their 
estate  is  not  over  one-fourth  of  what  the  entire  capital  is? 
I  think  such  corporations  should  be  taxed  on  the  volume  of  th( 
business. 

Q.  That  company  came  into  existence  not  through  special  laws 
or  favor,  but  by  organizing  under  the  general  law;  I  simply  wj 
to  call  your  attention  to  the  fact  that  your  limitation  as  to 
what  you  fix  will  not  enhance  certain  properties  if  you  are  goii 
to  confine  it  to  special  corporations  and  not  include  all  busim 
associations.  A.  I  should  consider  it  a  defect  in  the  law  if  cor- 
porations like  the  Manhattan  Elevated  Railroad  Company  can 
use  the  streets  without  a  proper  payment  to  the  people  for  thai 
special  privilege. 

Q.  As  regards  the  Western  Union  Telegraph  Company  wit 
a  capital  of  f  100,000,000  what  is  your  opinion?    A.     I  think 
should  pay  to  the  State  compensation  for  the  privileges  given 
the  company. 

Q.  As  regards  trust  companies  you  think  they  advance  com- 
merce?   A.  Yes,  sir. 

Q.  What  is  your  judgment  as  regards  taxation  of  the 
of  life  insurance  companies;  do  you  think  that  the  exemption  of 
those  companies  or  associations,  mutual  or  otherwise,  should 
continue?  A.  That  is  my  impression. 

Q.  They  should  be  exempt?    A.  Yes,  sir. 

Q.  How  about  the  bank  shares?     A.  My  thought  is  that  every 
form  of  personal  property  should  be  exempt  from  taxation. 

Q.  You  would  exempt  bank  shares?    A.  Yes,  sir. 

Q.  How   about   express   companies?    A.  Express   companies    I 
think  should  pay. 

Q.  Express  and  transportation  companies?    A.  Yes,  sir. 

Q.  Fire  and   marine   insurance   companies?    A.  I   should   say: 
fire  and  marine  insurance  companies  should  not  be  taxed. 


263 

Q.  Then  you  would  leave  but  the  express  companies  and  the 
j-ailroad  companies?  A.  They  should  be  taxed;  they  should  pay; 
ivhatever  institutions  are  operated  upon  franchises  based  upon 
he  use  of  streets  or  properly  belonging  to  the  people  should  pay 
!or  that  privilege. 

Q.  Our  railroads  now  pay  it,  do  they  not?  A.  They  do  upon 
;he  real  estate. 

Q.  And  even  our  city  railroads  pay  what  they  are  assessed  at 
'airly?  A.  They. 

Q.  If  you  are  going  to  wipe  out  all  those  other  corporations 

ivhere  are  you  going  to  get  your  tax  from?    A.  I  believe  in  the 

» 

jiheritance  laws  now  on  the  tax  books. 

Q.  Confine  yourself  to  corporations;  what  class  of  corpora- 
ions  would  you  assess?  A.  Transportation  companies. 

Q.  They  are  already  assestsed;  what  class  that  are  not  now 
ratside  of  railroad  companies?  A.  Express  companies. 

Q.  Outside  of  express  companies;  they  run  on  railroads  and 
}hey  are  the  same  thing.  A.  Telegraph  companies;  telephone 
companies;  gas  companies. 

Q.  You  would  exclude  manufacturing  companies?  A.  I  would 
seclude  manufacturing  companies. 

Q.  That  is  the  policy,  I  believe,  in  Pennsylvania  and  Massa- 
?husetts;  as  regards  the  inheritance  tax  have  you  had  any 
experience  with  that?  A.  I  have  not  been  brought  in  contact 
ivith  the  law,  but  my  opinion  is,  it  is  a  wise  law;  I  think  its  scope 
should  be  increased. 

Q.  In  what  respect?  A.  I  think  the  law  should  require  a  pay- 
nent  to  the  government  upon  all  legacies  whether  real  or  per- 
sonal property. 

Q.  Is  it  now  confined  to  personal?    A.  As  I  understand  it. 

Q.  It  should  also  reach  real  estate?    A.  Yes  sir. 

Q.  That  is  the  collateral  inheritance?    A.  Yes,  sir. 

Q.  Do  you  also  apply  the  same  to  the  direct?  A.  Yes,  sir;  I 
it  is  a  contribution  due  by  the  person  who  receives  this 
property  should  pay  his  part  to  the  government,  the  stability  of 
jivhich  has  made  the  accumulation  possible. 


264 

Q.    What  proportion  of  the  real  estate  assessed  in  the  inh< 
ance,  one  per  cent  or  five  per  cent?    A.  I  can  not  answer 
question  without  more  thought  and  study  than  I  have  given  to  the 
question,  but  I  think  the  principal  is  right. 

Q.  As  regards  your  office  and  its  relations  with  the  State  gov< 
ment  have  you  any  suggestions  to  make  concerning  the  operatic 
of  existing  laws?    A.  I  believe,  and  it  is  my  personal  opini< 
stated  without  even  consultation  with  my  colleague  —  I  belies 
it  would  be  better  if  instead  of  the  present  system  of  equalizatic 
it  were  made  the  duty  of  the  State  Assessors1  to  ascertain  tl 
full  value  of  the  counties  of  the  State  and  report  that  value,  ai 
have  the  tax,  if  a  State  tax  is  to  be  levied  upon  the  real  proper 
in  the  different  counties  —  have  the  State  tax  levied  upon  th( 
full  value  of  the  counties;    I  would  dispense  with  the  pivsei 
system  of  equalizing  as  betAveen  the  counties. 

Q.  Have  you  anything  to  do  with  equalizing  matters  whei 
there  is  assessments  on  the  line  of  a  railway  in  different  counties' 
A.  ]STo,  sir. 

Q.  Where  you  find  in  one  county  the  assessment  on  a  railwi 
is  twenty  per  cent  of  its  value  as  real  estate,  and  in  the  ne-3 
county  possibly  the  assessment  on  the  railway  is  eighty  per  cenl 
lias  your  board  any  jurisdiction  as  regards  regulating  that? 
No,  sir. 

Q  It  is  a  fact  that  throughout  the  different  counties  of  the  Stai 
that  this  large  discrepancy  in  assessment  prevails  from  year 
year,  and  the  difference  of  assessment  on  the  same  corporatioi 
in  different  counties  is  very  conspicuous,  and  your  board  lias 
jurisdiction?  A.  No,  sir. 

Q.  What  would  be  the  remedy  to  make  it  more  uniform, 
justice  to  both  the  people  and  the  corporations?  A.  I  think  it 
would  be  reached  in  part  if  the  State  Board  of  Assessors  should 
be  required  to  report  the  full  value  of  the  county,  so  that  the 
State  tax  could  be  assessed  upon  the  full  value  of  the  real  prop- 
erty in  the  counties;  then  such  cases  as  the  one  you  speak  of 
would  be  reached. 


265 

Q.  Have  you  equalized  the  tax  of  the  State  for  this  year  since 
7011  have  been  a  member?    A.  Yes,  sir;  for  1892. 

Q.  How  much  have  you  deducted  for  the  county  of. New  York? 
A.  We  added  $80,000,000. 

Q.  How  did  you  arrive  at  that  conclusion;  I  believe  you  repre- 

nt  this  county?     A.  I  consider  myself  a  State  officer. 

Q.  I  mean  you  reside  in  this  county?  A.  Yes,  sir;  the  result  was 
rrived  at  after  examination  of  real  estate  transfers  in  the  city 
f  New  York,  and  after  conference  with  the  tax  commissioners. 

Q.  Will  you  give  us  the  substance  of  your  interview  wit1!  the 
ax  commissioners?  A.  The  tax  commissioners  claimed  that  in 
tie  city  of  New  York  property  was  assessed  for  the  purposes  of 
axation  at  from  sixty-eight  to  seventy  per  cent  of  the  full  market 
alue;  the  State  board  of  assessors  allowed  seventy-three  per 
en  i 

Q.  On  what  did  you  base  that  sum?  A.  Upon  our  examination 
nd  the  best  opinion  we  could  form  after  conference  and 
LM stigation. 

Q.  I  notice  you  add  to  Westchester  county ;  what  percentage  did 
on  allow  there;  you  added  largely  to  Westchester  in  proportion? 
I  I  don't  remember  the  percentage,  but  it  was  not  changed 
rom  the  percentage  as  fixed  by  our  predecessors,  because  we 
iad  nc  opportunity  of  visiting  the  county. 

Q.  Sixty-three  in  this  county;  do  you  remember  any  other 
oi;nty  as  to  what  was  the  amount  allowed?  A.  Kings,  I  belle  re, 

s  fixed  by  the  board  of  equalization  at  sixty-eight,  that  is  my 
mprtssion. 

Q.  Any  other  county  throughout  the  State?  A.  I  think  Erie 
vas  fixed  at  a  percentage  above  seventy,  but  I  can  not  remember; 
-he  data  is  with  the  chairman  of  the  board,  Mr.  Wood  of 
3oi.'ghkeepsie. 

Q.  The  amount  that  was  added  on  to  this  county  previous  to 
rour  going  into  office  was  much  larger  than  80,000,000,  was  it 
lot?  A.  Yes,  sir. 

Q.  How  much  larger  was  it)?    A.  I  can  not  remember,  but  I 
hink  for  the  year  1891,  $120,000,000. 
34 


266 

Q.  So  it  is  much  less  ilian  it  was  before?  A.  The  addition 
is  less  because  of  our  fixing  the  rate  of  assessment  here  at  sixty- 
three  per  cent  of  the  full  value;  I  believe  our  predecessors  satis- 
fied themselves  that  sixty  per  ceul  \vas  all  to  which  New  York  was 
entitled. 

By  the  Chairman. 

Q.  For  this  year?    A.  No,  sir;  sixty  per  cent  for  the  yet 
previous  to  this  year. 

By  Mr.  Creamer. 

Q.  As  regards  the  time  of  the  year  of  making  those  assess- 
ments and  the  action  of  your  board  in  equalizing,  in  some  of  the 
counties  large  sums  are  borrowed  from  year  to  year  in  anticipa- 
tion of  the  gathering  in  of  the  revenue,  and  interest  paid  to  antici- 
pate the  collection  of  taxes;  have  you  looked  into  that  subject? 
A.  I  have  not. 

Q.  And  as  to  whether  if  the  law  was  changed  concerning  som< 
of  the  counties  more  particularly  the  county  of  New  York,  \\hei 
the  last  fifteen  or  twenty  years,  perhaps  longer,  there  has  been 
interest  paid  something  like  14,000,000  for  revenue  bonds  to 
the  taxes,  at  least  in  anticipation  of  collecting  the  taxes,  and  it 
has  been  suggested  to  change  the  law  so  that  assessing  the  pi 
erty  and  the  making  up  of  the  tax  budget  for  the  year,  togotht 
with  the  collection  of  taxes  for  that  year,  will  be  changed  to 
commencement  of  the  year  rather  than  to  the  ending  of  the  year; 
have  you  given  that  question  any  consideration?    A.  I  have  not; 
I  should  think  that  any  just  system  of  taxation  would  take  in1 
consideration  the  convenience  both  of  the  people  who  pay 
taxes  and  the  different  divisions  of  the  State  which  ultimatel 
pay  to  the  State. 

By  the  Chairman. 

Q.  Your  board  has  had  several  meetings  throughout  the  State? 
A.  Yes,  sir. 

Q.  Have  you  heard  of  complaints  of  the  representatives  of  the 
rural  districts  about  the  burdens  of  taxation  that  fall  upon  them  ? 


267 

L  The  nature  of  the  complaint  seems  to  be  that  the  rural  dis- 
ricts  are  not  growing  in  population;  that  the  value  of  farm  prop- 
rty  is  either  at  a  standstill  or  is  decreasing. 

Q.  Have  you  made  any  examination  or  comparison  of  the  raU'H 
f  taxation  in  the  several  counties  of  the  State?  A.  Of  the  rates 
f  local  taxation? 

Q.  Yes,  sir?  A,  No,  sir;  I  may  say  that  while  the  board  o' 
ssessors  has  visited  various  sections  of  the  State,  our  tour  has 
ot  been  thorough. 

Q.  For  instance,  do  you  know  what  the  average  rate  of  taxa- 
ion  is  in  the  county  of  Orange?  A.  No,  sir. 

Q.  Do  you  know  what  the  rate  is  in  the  county  of  New  York? 
About  one  and  eighty-five  hundredths. 

Q.  What  seemed  to  be  the  nature  of  the  complaint  inad3  by 
he  representatives  of  the  rural  counties?  A  That  the  value  of 
arm  property,  as  I  said,  is  either  at  a  standstill  or  is  decreasing, 
g  a  result  of  the  growth  of  the  cities  and  the  permanency  of  the 
ural  population. 

Q.  But  do  they  not  claim  that  the  burden  of  expense  of  govern- 
lent  is  falling  unjustly  upon  them?  A.  The  burden  of  the 
xpense  of  State  government? 

Q.  Yes,  sir?  A  So  far  as  the  board  of  equalization  failed  to 
ake  into  account  the  decreased  value  of  farm  property  that  is 
rue;  that  has  been  the  complaint. 

Q.  Did  your  board  make  any  inquiry  or  investigation  with  a 
lew  to  ascertaining  whether  or  not  those  complaints  were  wrJi 
aunded?  A.  Yes,  sir. 

Q.  What  did  you  find  the  result  to  be?  A.  I  think,  in  the 
lain,  they  are  well  founded. 

Q.  Have  you  made  any  investigation  with  a  view  to  ascer- 
aining  what  proportion  of  the  expense  of  State  government  i; 
aid  by  the  agricultural  interests  of  the  State?  A.  I  have  not, 
ut  I  should  say  a  very  large  share  of  the  expenses  of  State  gov- 
nunent  are  paid  by  the  cities  of  the  Stn  ( <•. 

.  My  information  is  that  only  about  eight  and  a  half  per  ceni 

Pic  expense  of  State  government  is  paid  by  the  agricultural" 
ities;  have  you  heard  anything  that  would  seem  to  coniirin 


268 

that?  A.  I  should  say,  without  examining  the  question  closely, 
that  ten  per  cent  would  fully  cover  it;  I  mean  by  that  the  puroly 
agricultural  sections  of  the  State. 

Q.  Those  are  the  sections  to  which  I  refer,  and  if  ten  per  cent 
is  all  that  the  agricultural  districts  of  the  State  contribute 
toward  defraying  the  expenses  of  State  government,  what  relief, 
in  your  opinion,  would  those  localities  derive;  suppose  we  wipe 
out  altogether  this  ten  per  <;ent  and  relieve  them  from  contribu- 
ting towards  the  State  government;  do  you  think  they  would 
be  very  much  better  off  than  they  are  now?  A.  They  would  be 
better  off  to  the  extent  of  the  payment,  whatever  it  may  "be;  I 
believe  that  the  rural  districts  of  the  State  would  be  benefited 
by  the  exemption  of  personal  property,  if  it  should  be  followed, 
as  I  think  it  would  be,  by  Increased  real  estate  in  the  cities  oi 
the  State. 

Q.  Now,  the  fanners  and  their  representatives  who  claim  the 
right  to  speak  for  them  on  the  question  of  taxation  all  seem  to 
unite  in  the  opinion  that  it  would  be  better  for  the  farming 
interest  to  have  all  personal  property  taxed;  have  you  made 
any  inquiry  or  investigation  with  a  view  to  forming  an  opinion 
as  to  whether  they  are  right  or  wrong  in  that  theory?  A.  I  have 
done  some  reading  and  thinking  outside  of  my  work  as  a  State 
Assessor,  which  with  the  light  I  now  possess  satisfies  me  that  the 
farmer  is  in  error  in  that  assumption. 

Q.  In  other  words,  in  that  particular  you  think  the  farmer  does 
not  know  what  is  for  his  own  best  interests?  A.  I  could  not 
say  that;  there  is  room  for  a  conscientious  difference  of  opinion; 
I  can  only  say  what  is  my  view  and  my  opinion. 

Q.  In  the  light  of  your  experience  is  it  or  is  it  not  your  opinion 
that  the  burden  that  falls  on  the  farmer  is  largely  the  burden  of 
local  government?  A.  Yes,  sir;  of  local  taxation. 

Q.  And  the  burdens  that  he  really  complains  about  are  not 
the  burdens  of  State  government  but  the  burdens  of  local  taxa- 
tion? A.  I  think  that  is  true 

Q.  And  that  the  expenses  of  local  government  in  the  countiy 
are  proportionately  very  much  higher  than  they  are  in  the  city?1 
A.  I  think  that  is  true. 


269 

Q.  Now,  do  you  believe  t  hat  very  much,  relief  would  come  to 
the  fanner  if  we  wiped  out  altogether  his  share  of  contributing 
i to  the  State  government  by  a  tax  upon  his  real  estate?  A.  If 
that  could  be  done  without  crippling  the  sources  of  local  taxa- 
tion he  would  be  benefited,  of  course,  to  that  extent,  but  if  it 
should  be  done  by  taking  from  him  any  of  the  sources  of  local 
taxation,  it  might  be  a  very  serious  injury  to  him;  it  might  cost 
him  more  in  that  which  he  gives  up  than  what  he  is  benefited. 

Q.  Would  you  or  not  recommend  divorcing  the  question  of 
the  collection  of  taxes  for  State  purposes  from  that  for  local 
purposes?  A.  If  it  can  be  done  without  expelling  capital  from 
[the  State  and  without  lessening  or  imperiling  the  sources  of 
local  taxation,  I  think  it  is  most  desirable. 

Q.  You  can  see  that  if  such  a  method  was  devised  it  would  do 
away  with  this  much  mooted  question  of  equalization?  A.  Yes, 
i-sir:  I  see  another  advantage  in  it;  I  think  it  would  make  pos- 
psible  the  enactment  of  a  local  option  law  which  would  give  to  the 
pvarious  counties  the  right  to  tax  or  exempt  from  taxation  per- 
jsoual  property. 

Q.  Y'ou  think  that  would  be  advantageous?    A.  Yes,  sir. 

By  Mr.  Coggeshall. 

Q.  Do  you  mean  to  place  the  power  in  the  boards  of  super 
^ visors?  A.  Yes,  sir;  the  county  authorities. 

By  the  Chairman. 

Q.  Would  you  give  the  local  boards  legislative  power  in  that 
Itregard?  A.  Yes,  sir. 

Q.  You  would  be  in  favor  of  passing  an  act  which  would  give 
[to  them  the  right  without  any  interference  on  the  part  of  the 
^Legislature  to  levy  the  taxes  for  local  purposes  as  they  saw  fit? 
I  A.  Yes,  sir. 

Q.  What  do  you  say  as  to  the  wisdom  of  taxing  bonds  and 
mortgages?  A.  I  think  it  would  be  a  mistake. 

Q.  You  are  not  in  favor  of  it  at  all?    A.  No,  sir. 


•» 

: 


270 

Q.  Have  you  considered  at  all  the  acts  providing  for  collateral 
and  direct  inheritance  tax?     A.  I  think  as  I  have  already  sal' 
that  the  law  is  a  good  one. 

Q.  Have  you  considered  the  proportion  of  tax  imposed  wit 
view  to  determining  whether  you  would  be  in  favor  of  increas 
or   decreasing  the  rates?     A.  I  think  I   could   favor   a   grade 
tax — -a  tax  levied  in  proportion  to  the   amounts  devised  ai 
received  by  single  heirs;  I  think,  in  other  words,  that  the  perso 
receiving  a  legacy  of  $500,000  should  pay  a  larger  percentage 
than  the  person  who  receives  a  legacy  of  $15,000. 

Q.  Suppose  the  tax  should  continue  to  be  uniform  as  now  on 
the  collateral  inheritance,  would  you  be  in  favor  of  confirming 
it  at  five  per  cent  or  increasing  it?  A.  I  can  not  give  an  offhaudi 
opinion  on  that  question. 

Q.  What  do  yo*  say  of  the  tax  imposed  on  direct  inheri 
of  one  per  cent;  do  you  consider  that  enough?    A.  No,  sir. 

Q.  What  would  you  fix  that  at  if  you  had  your  way?  A. 
seems  to  me  it  should  not  be  less  than  two  and  a  half;  I  thi 
the  contribution  should  be  a  liberal  one,  or  the  payment, 

Q.  Then,  you  would   advise  the  amendment  of  that  law 
increasing  the  rate  to  two  and  a  half?    A.  One  per  cent  migh 
be  enough  upon  amounts  between  $10,000  and  $50,000. 

Q.  What  do  you  think  would  be  a  fair  compensation  for  t| 
services  of  the  officer  who  collects  that  tax,  considering  that, 
think,  all  of  them  are  salaried  officers?  A.  I  think  five  per  cen 
is  far  too  much;  w^hat  wrould  be  a  proper  compensation  I  coul 
hardly  say. 

Q.  Wouldn't  the  amount  have  something  to  do  with  that? 
It  ought  to. 

Q.  You  would  be  in  favor  of  making  the  compensation  graded 
A.  Yes,  sir. 

Q.  Suppose   that   the  policy  of  the  State  to   assess  persona 
property  shall  continue,  what  do  you  say  about  the  wisdom  < 
allowing  offsets  by  evidences  of  debts?    A.  I  think  such  all<>\\ 
ances  should  be  made 


271 

Q.  Then,  if  you  are  in  favor  of  allowing  such  deductions  to  bo 
made  in  regard  to  personal  property  what  do  you  say  as  to  real 
property?  A.  It  ought  not  to  be. 

Q.  What,  you  make  an  allowance  in  the  case  of  one  and  not 
in  the  other?  A.  I  consider  real  estate  the  best  basis  of  a  sys- 
tem of  taxation;  it  is  immovable  and  permanent,  easily  found 
and  should  be  assessed  at  its  value  without  reference  to  amounts 
which  may  be  owing  by  the  person  who  is  occupying  it. 

Q.  Put  it  in  this  way:  If  one  man  is  indebted  to  the  extent 
of  |100,000  on  his  real  estate,  his  equity  being  only  f  50,000,  but 
tie  pays  on  the  full  and  true  value  of  f  150,000;  now,  another  man 
is  in  just  the  same  plight  except  that  he  has  got  $100,000  invested 
in  some  good  paying  business;  he  offsets  the  $100,000  indebted 
ness  as  against  the  $100,000  that  he  has  invested  in  his  business, 
and  he  escapes  taxation  on  that  money  invested  in  his  business; 
what  do  you  say  to  that?  A.  I  say  as  a  principle  that  the  money 
nvested  in*  his  business  ought  not  to  be  taxed. 

Q.  I  put  it  on  the  assumption  that  the  policy  of  the  State  to 
assess  personal  property  should  be  continued;  then,  what  do  you 
say  as  to  the  equity  of  the  course  as  between  the  two?  A.  That 
would  seem  to  be  unjust;  if  the  personal  tax  is  to  be  continued 
;he  law  should  be  enforced  as  it  stands  upon  the  statute  book, 
and  he  should  pay  a  tax  upon  the  $100,000  invested  in  his  business. 

Q.  That  is  the  reason  why  I  propounded  the  question  that  I 
did;  the  law  to-day  allows  an  offset  of  indebtedness  against  the 
>ersonal  assessment;  some  of  the  committee  at  least  appear  to 
be  of  the  opinion  that  it  is  not  right  to  allow  offsets  of  indebted- 
ness against  personal  assesments;  that  the  rule  as  to  personal 
>roperty  ought  to  be  the  same  as  it  is  to  real  estate?  A.  I  think 
if  that  were  the  rule  real  estate  would  loose  its  value. 

By  Mr.  Ahearn. 

Q.  I  think  that  the  chairman  means  to  say  that  a  man  comes 
>efore  the  board  of  assessors  and  he  is  down  on  the  tax  books  for 
1100,000  he  borrows  $100,000,  and  he  swears  that  his  indebtedness 
8  f  100,000  and  that»  wipes  out  his  personal  tax.  A.  Yes,  sir. 


272 

Q.  He  means  to  ask  do  you  think  that  is  fair?  A.  The  question 
is  should  a  man  be  taxed  upon  his  business  debts? 

Q.  Whether  in  your  judgment  you  think  they  have  the  right 
to  go  before  the  board  of  assessors  and  swear  that  off?  A.  1 
think  a  man  has  that  right. 

By  the  Chairman. 

Q.  We  had  two  statements  of  the  tax  office  here  the  other 
to  make  it  plain  they  were  statements  of  two  publishing  corpora- 
tions; they  both  owned  real  estate;  the  holdings  of  the  one  are 
of  much  more  value  than  the  other,  but  the  one  that  has  the 
greatest  holding  of  real  estate  paid  a  tax  on  $3,400,  while  the 
other  one  with  the  lesser  holding  paid  a  tax  on  $199,000 ;  now,  the 
reason  that  the  one  with  the  larger  holdings  escaped  the  payment 
of  tax  except  upon  $3,400  Avas  that  the  mortgage  indebtedness  o  i 
the  real  estate  was  offset.  A.  I  think  that  the  law  which  makes 
such  'seeming  inequalities  ought  to  be  repealed. 

Q.  Then  you  favor  the  disallowance  of  the  real  estate  indebted- 
ness as  against  personal  property?  A.  I  am  sorry  to  say  that  I 
can  not  follow  you  closely  enough"  to  make  plain  to  myself  the 
distinction  you  are  making;  I  state  it  as  my  opinion  that  the 
taxing  of  personal  property  should  be  stopped. 

Q.  The  committee  fully  understands  that  you  are  in  favor  of 
the  non-assessment  of  personal  property.  A.  Yes,  sir. 

Q.  But  I  ask  you  the  questions  that  I  have  asked  you,  assum- 
ing that  the  policy  of  the  State  to  assess  personal  property  shall 
continue,  then  and  in  that  event  are  you  in  fa\ror  of  allowing  the 
holder  of  real  estate  to  offset  his  assessment  on  personal  prop- 
erty with  the  bonded  indebtedness  on  real  estate?  A.  No,  sir. 

By  Mr.  Quigley. 

Q.  Wha/t  would  yon    think  as  to  the  assessors  keeping  theirj 
books  open  a  little  longer,  and  after  discovering  an  indebtedness 
to  tax  that  in  the  case  of  the  parties  who  hold  it?    A.  I 
that  would  be  wise  if  the  personal  tax  is  to  be  continued, 


273 

Q.  At  the  present  time  the  assessors  make  up  their  list  tit  a, 
certain  time  of  the  year,  and  at  that  time  a  discovery  is  made  of 
j those  offsets;  \vihat  would  you  think  of  increasing  that  time  so 
as  to  reach  the  party  in  whose  hands  the  indebtedness  is  and  put 
jhim  on  the  list,  and  tax  that  indebtedness  in  the  hands  of  the 
[party  who  holds  it?  A.  It  would  seem  to  be  judicious. 

Q.  Wouldn't  that  remedy  this  evil  of  offsetting  bonded  indebted- 
Iness?  A.  I  think  so. 

By  the  Chairman. 

Q.  You  know  that  a  large  proportion  of  the  tax  collected  by  the 
State  goes  to  the  support  and  maintenance  of  the  canals,  which 
ive  been  free  for  a  large  number  of  years;  do  you  think  that  the 
(benefit  derived  from  the  people  of  the  State  justifies  the  con- 
tinuance of  that  general  tax  for  canal  purposes?    A.  That  is  my 
)inion  with  the  light  and  information  I  have;    the  opinion  is 
tost  general. 

Q.  In  what  direction  do  you  think  the  benefit  comes?    A.  By 
lulating  the  growth  of  the  cities,  and  more  especially  the 
>wth  of  the  city  of  New  York. 

Q.  Do  you  think  the  canals  have  much  to  do  with  the  city  of 
Tew  York?  A.  Yes,  sir;  whatever  may  tend  to  legitimately 
icrease  the  population  and  commerce  of  the  city,  and  I  should 
jify  to  make  it  plainer,  Buffalo  and  New  York,  increase  the 
meral  prosperity  of  the  State. 

Q.  Then  you  think  the  large  proportion  of  benefit  derived  from 
maintenance  of  canals  by  public  expense  goes  to  those  two 
les?    A.  I  think  a  very  large  portion,  but  I  tihiink  the  benefits 

diffused  through  the  State  directly  and  indirectly. 
Q.   Now,   suppose  we  divorce  the  two   systems  of   collecting 
bte  and  local  taxation,  and  bearing  in  mind  that  the  benefits 
canals  largely  go  to  New  York  and  Buffalo,  how  would  your 
nroportion  the  expenses  of  maintaining  those  waterways?    A.  I 
;ant  to  say  that  as  I  view  it  the  canals  as  they  stand  are  a 
to  the  State  at  large,  and  as  such  they  should  be  a  State 
irge;  I  doubt  very  much  whether  there  is  a  section  of  the  State 
35 


that  is  not  benefited  by  the  existence  of  the  canals,  just  as  the 
entire  State  is  benefited  by  the  existence  of  the  Hudson  river;  11; 
is  not  only  the  benefit  to  Yonkers  and  Newbiirgh  and  New  York 
and  Albany,  but  to  the  entire  commonwealth;  if  the  Hudson  river 
should  be  filled  in  to-morrow  it  would  be  a  disaster  shared  by  every' 
resident  in  this  State,  and  I  think  the  same  holds  true  as  to  the 
canals. 

Q.  I  do  not  suppose  you  can  recall  the  conditions  that  prevaile 
before  the  tax  was  taken  off  the  canals?    A.  No,  sir. 

Q  You  can  not  say  that  the  condition  of  canals  is  any  botl 
than  it  was  before  the  canals  were  made  free?    A.  I  have 
knowledge  at  all  upon  the  subject. 

Bj  Mr.  Creamer. 

Q.  Are  you  familiar  with  the  legislation  of  other  States  o:a» 
this  question  of  taxing  corporations?  A.  No,  sir. 

Q.  When  you  say  exempt  all  mortgages  from  taxation  you  are 
not  aware  then  of  the  law  concerning  taxation  of  mortgages  in 
other  States?  A.  No,  sir;  I  am  not, 

Q.  You  have  not  any  other  information?    A.  No,  sir. 

Q.  You  express  that  as  your  opinion?    A.  As  a  principle. 

Q.  As  your  opinion?    A.  Yes,  sir. 

Q.  Based  upon  what?  A.  Upon  my  thought  and  reading,  and:| 
upon  my  belief  that  if  mortgages  should  be  taxed  the  tax  would'] 
eventually  fall  upon  and  be  paid  by  the  borrower;  it  would  »»itheri 
be  paid  by  him  in  some  way  direct  or  indirect  or  would  affect  th&j 
rate  of  interest.  ( 

Q.  Do  you  not  suppose  that  those  large  corporations  loaning] 
on  bond  and  mortgage  understand  what  the  contract  is,   and] 
the  other  understands  full  well  when  he  agrees  upon  the  rale  of 
interest?    A.  Yes,   sir;  but  I  assume  that  in  all  transactions] 
covering  the  borrowing  and  loaning  of  money,  the  net  resull 
is  the  deciding  factor. 

Q.  Suppose  a .  man  in  this  community  is  financially  able  toj 
invest  $10,000,000  in  first  mortgages  paying  five  per  cent  and 
get  $500,000  income  out  of  that  investment,  so  you  do  not  tliinh 


•ho  should  pay  any  tax  towards  the  government  where  his  money 
•is  invested;  suppose  a  man  has  $10,000,000  invested  in  first  mort- 
gages in  this  city  and  has  an  income  from  that  of  f 500,000  a  year, 
do  you  not  think  ho  should  contribute  his  share  towards  the 
support  of  government?  A.  I  think  he  should  pay  upon  the  real 
rstate  he  may  own;  I  think,  if  the  effort  should  be  made  to  tax 
tiiui  upon  the  mortgages,  that  he  would  eventually  compel  the 
umncnt  of  that  tax  by  the  person  who  borrowed  fi-oni  him  the 
noney  secured  by  the  mortgage. 

2-  We  are  looking  at  a  condition  of  things,  not  a  theory*;  do  you 
lot  think  that  a  man  who  gets  an  income  from  his  mortgages  of 
K)me  half  a  million  a  year  should  pay  some  share  of  the  expenses 
if  government?  A.  It  would  seem  as  if  he  should. 

The  committee  then  went  into  executive  session. 

On  motion  it  was  decided  that  the  committee  should  h'.id 
he  next  meeting  in  Syracuse,  at  the  Yates  House,  December 
9,  1892,  at  10  a.  m. 

Syracuse,  N.  Y.,  December  29,  1892T 
The  committee  met  pursuant  to  adjournment. 

E.  S.  Bartlett,  called  as  a  witness,  being  duly  sworn,  testified 
s  follows: 

By  Mr  Hamilton. 

Q.  Where  do  you  reside?    A.  Seneca  county. 

Q.  What  is  your  occupation?  A.  My  occupation  for  a  long 
me  has  been  farmer  and  some  incidentals  outside,  at  present 
oldinjr  the  position  of  school  commissioner. 

Q.  How  long  have  you  been  a  farmer?  A.  i  have  managed  a 
arm  since  1858. 

Q.  Principally  in  Seneca  county?  A.  Yes,  sir;  entirely  in 
teiieca  county  on  the  farm  on  which  I  was  born  and  on  which  I 
ow  reside. 

Q.  Have  you  at  various  times  held  public  office  in  that  county? 
L  Yes,  sir. 

Q.  In  what  capacity?  A.  I  have  held  nearly  every  position 
a  the  gift  of  the  town  except  poor  master  and  constable. 


276 

Q.  What  position  have  you  held?  A.  Supervisor,  justice 
inspector  of  election,  assessor. 

Q.  And  your  position  as  assessor  and  supervisor  has  brouj 
you  in  connection  with  the  question  of  taxation?    A.  Yes,  sir. 

Q.  What  have  you  to  say  as  to  the  propriety  of  amending  1 
present  laws  on  taxation,  assessment  and  interest,  so  far  as 
affect  the  agricultural  interests  of  the  State?     A.  My  idea 
regard  to  that  is  that  the  assessment  laws  should  touch  equally 
upon  all  real  and  personal  property,  and  that  each  person  should 
pay  his  proportion  for  the  support  of  the  general  government  0^1 
the  State  government,  as  hi-s  interest  financially  appears,  whethei| 
it  be  in  personal  or  real  property. 

Q.  Is  it  your  experience  as  supervisor  or  assessor  or  both  tha 
such  is  not  the  present  condition  of  affairs  in  your  county? 
Yes,  sir 

Q.  What  class  of  property  is  it  that  escapes?  A.  Oftentiinet 
it  lias  been  mortgages  thac  escaped  and  general  money  matters 
that  are  laid  out  at  interest  on  either  note  or  other  collaterals  ~ 
other  obligations, 

Q.  Is  this  property  that  escapes  to  your  knowledege  the  prop 
erty  of  individuals  or  principally  that  of  corporations?  A. 
think  that  that  has  come  into  my  immediate  knowledge  has  been 
more  individually,  but  I  think  there  is  quite  a  good  deal  of  corpo 
ration  or  company  matters  that  escapes  in  our  manufacturing 
villages. 

Q.  What  has  been  the  rosult  of  this  escape  of  personal  prop 
erty  from  its  taxation  that  you  have  described  upon  the  rea 
estate  of  your  county?  A.  It  necessarily  makes  the  real  estate 
pay  a  larger  proportion  of  tue  tax. 

Q.  Now,  has  that  effect  on  the  market  values  of  real  property 
in  yum-  country?  A.  You  have  reference  to  farm  lands? 

Q.  Yes,  sir.  A.  It  has  also  a  great  effect  upon  the  village 
property  as  I  learn,  and  I  don't  know  as  I  can  attribute  it  wholl;1 
to  the  effect  of  assessments  or  the  amount  of  tax  which  the  indi<; 
viduals  pay,  but  the  real  estate  in  the  county  of  Seneca  is  verj 
much  depreciated  in  value. 


277 

Q.  Can  you  tell  us  for  how  long  a  period  that  decrease  has 
een  extending?  A.  There  began  a  marked  decrease  about  six 
ears  ago;  it  has  been  more  rapid  for  the  last  three  years  so  far 
s  my  observation  and  knowledge  goes. 

Q.  That  necessarily  means  a  decreased  market  for  the  sale  of 
arm  lands?  A.  There  is  very  little  market  for  farm  lands;  there 
ias  scarcely  a  farm  been  sold  where  a  purchaser  has  come  in  and 
mught  it  out  and  out;  unless  it  is  on  the  verge  of  being  sold 
nder  mortgage  or  the  necessity  of  selling  it  in  order  to  save  it 
eing  sold  that  way. 

Q.  Outside  of  forced  sales  is  there  any  other  extensive  market 
or  farm  lands  in  your  county?  A.  No,  sir;  I  only  know  of  two 
lat  have  been  sold  for  three  years. 

Q.  How  long  has  that  condition  existed?  A.  About  the  last 
iree  years  it  has  been  more  marked  than  at  any  time  previous. 

Q.  Can  you  describe  to  us  what  way  personal  property  escapes 
axation  in  your  county;  what  methods  are  resorted  to?  A. 
Vhen  the  assessors  make  their  annual  rounds  they  deny  having 
ny  property  in  their  possession  and  unless  the  assesors  can  find 
ut  by  any  means  outside  of  the  person  they  are  trying  to  assess 
lat  he  has  holdings  against  other  parties  they  fail  to  get  it;  they 
ail  to  get  any  amount  against  them;  some  will  give  a  portion  of  it. 

By  the  Chairman. 

Q.  I  would  like  to  ask  you  whether  you  have  in  mind  any 
mendment  or  modification  to  the  existing  law  that  in  your 
pinion  would  cure  that  defect?  A.  I  don't  know  of  any  but  one, 
nd  that  would  make  each  individual  his  own  assessor  under  oath. 

By  Mr.  Guenther. 

.  That  is  the  listing  system?  A.  1  know  of  no  other  way  to 
neet  it  otherwise;  if  a  person  whom  I 'might  approach  to  find  out 
he  property  he  had  for  the  purpose  of  assessment  would  deny 
aving  it,  and  I,  as  assessor,  had  no  way  of  finding  it  out,  and  the 
ifficulty  of  finding  out  who  owns  the  obligations,  I  can  not  see 
ny  way  unless  you  have  the  man  himself  testify. 


279 

By  the  Chairman. 

Q.  You  say  that  those  people  deny  having  the  property 
the  assessor  comes  around?    A.  Yes,  sir. 

Q.  Do  you  think  that  with  such  people  you  would  reach 
property  if  they  were  called  upon  to  make  a  sworn  statemei 
A.  I  don't  know  as  they  would;  you  might  meet  them  too  late. 

Q.  Hasn't  your  experience  taught  you  that  a  man  who  will  tei 
a  lie  would  just  as  soon  swear  to  it?  A.  I  was  going  to  add  that 
to  it  if  I  had  had  tune  enough ;  I  don't  know  as  it  makes  much  dif- 
ference so  far  as  the  tax  law  is  concerned  whether  they  de  or 
swear  to  it. 

Q.  I  was  only  trying  to  ascertain  what  your  views  would  be  £.8 
to  the  benefits  of  the  listing  system  as  to  the  class  of  people  who 
evade  taxation  by  lying?    A.  I  will  give  you  a  man;  when  I  was 
assessor  he  gave  in  $20,000;  he  had  350  acres  of  land;  the  nex 
year  he  said  he  had  increased  that  amount  $1,000,  and  gave 
$21,000;  I  said  to  him  I  thought  that  was  quite  a  small  increase 
on  $20,000,  with  interest;  his  presentation  of  that  case  was  that 
his  children  had  become  owners  of  quite  a  proportion  of  his  income 
and  that  he  himself  only  increased  $1,000;  he  was  a  member  ol 
the  church,  and  considered  a  very  moral  man  and  a  great  tern 
perance  man,  and  after  that  he  died  —  a  few  years  ago  —  anc 
his  personal  estate  amounted  to  over  $40,000,  and  if  it  was  true 
that  he  had  but  $21,000  when  he  told  me  he  made  $19,000  in  two 
years;  I  don't  know  how  we  are  going  to  meet  them;  it  is  a 
question  beyond  my  ability  to  decide  how  it  is  to  be  met. 

Q.  Do  you  think  the  result  would  have  been  different  with  that 
man  if  he  had  the  listing  system?  A.  Yes,  sir;  I  don't  think  he 
would  have  sworn  to  a  lie ;  I  think  that  as  far  as  that  man  is  con- 
cerned  you  would  have  got  the  tax,  but  there  are  some  others 
that  would  do  as  you  say. 

By  Mr.  Hamilton. 

Q.  Is  the  sentiment  of  your  county  in  favor  or  the  adoption  ol 

the  listing  system?    A.  I  have  heard  but  a  very  few  express- 

themselves  in  regard  to  the  matter,  and  I  don't  think  over  ter 


279 

persons  in  the  county  that  expressed  themselves  to  me,  and  they 
were  generally  more  in  favor  of  it  than  otherwise;  I  think  a 
majority  are  in  favor  of  it 

Q.  Are  you  a  member  of  the  State  Grange?  A.  Yes,  sir;  but 
not  an  official. 

Q.  Have  you  ever  canvassed  the  opinions  of  the  members  of  the 
State  Grange  as  to  the  listing  system?  A.  I  think  it  was  dis- 
cussed at  some  time  at  the  State  Grange  session  when,  as  I 
remember  it,  I  think  there  was  quite  a  sentiment  in  its  favor, 
but  I  don't  think  there  was  any  vote  taken  on  the  question. 

Q.  That  sentiment  was  based  upon  the  idea  that  it  would  be 
beneficial  to  the  agricultural  interests  of  the  State?  A.  Yes,  sir. 

Q.  How  is  it  in  regard  to  mortgage  indebtedness  in  your 
county;  does  that  bear  its  share  of  the  tax  under  the  present 
law?  A.  I  think  quite  a  little  of  it,  as  I  remarked  before, 
escapes  —  quite  a  percentage  of  it;  the  difficulty  is  that  a  great 
many  persons  have  their  property  mortgaged  that  the  assessor 
has  not  an}  knowledge  of  and  they  don't  inquire  of  each  and  every 
one  whether  they  have  a  mortgage  on  it  or  not,  and  consequently 
it  £Y'ts  passed  by;  when  I  was  assessor  we  had  a  meeting  of  the 
board  of  assessors  before  we  commenced  our  work;  we  passed  a 
resolution  to  ask  every  man  whether  he  had  any  indebtedness 
on  his  farm  in  a  mortgage,  and  who*had  it;  after  we  got  started 
to  work  we  found  that  some  people  were  very  cranky  on  that  mat- 
ter—  thought  it  was  none  of  our  business;  and  even  when  we 
explained  that  it  was  to  have  those  persons  who  held  the  mortgage 
pay  taxes  it  did  not  make  any  difference;  my  other  two  associ- 
ates failed  to  carry  out  the  program  after  they  got  rebutted 
several  times,  but  the  result  was  that  we  increased  our  personal 
property  from  $175,000  in  round  numbers  to,  I  think,  $218,000;  T 
know  the  amount  on  the  part  that  I  did  the  assessing  of  I  got 
|10,000  more  than  on  the  previous  year. 

Q  Is  h  not  your  experience  that  a  great  part  of  the  difficulty 
that  arises  is  owing  to  the  lax  administration  of  the  law  rather  than 
to  the  administration  itself?  A.  No;  not  as  far  as  the  assessing 
is  concerned. 


280 

By  the  Chairman. 

Q.  Lack  of  sympathy  with  the  law  on  the  part  of  the  people? 
Yes,  sir;  that  will  do;  I  don't  know  a«i  1  would  like  to  answer  il 
on  that  construction  either;  I  think  that  the  fact  is  that  oacl: 
individual  assessor  feels  that  he  is  not  equal  to  the  occasion; 
think  there  is  some  of  it  in  consequence  of  the  ignorance  of  tin 
assessor;  I  am  quite  well  satisfied  that  as  far  as  Seneca  county  is 
concerned  that  we  do  not  get  as  good  men  for  assessors  as  we 
ought  to  get;  there  is  no  man  too  good  to  be  an  assessor,  while 
we  have  some  men  of  very  small  capacity. 

Q.  Isn't  that  attributable  in  a  measure  to  the  fact  that 
assessor  does  not  get  a  fair  compensation  for  the  service  he 
called  upon  to  render?    A.  I  don't  think  that  has  very  much 
do  with  that,  as  long  as  he  can  get  only  two  dollars  a  day,  I  don' 
think  it  makes  any  difference  whether  he  does  a  big  -lay's  v/ork 
or  a  little  one,  but  I  think  he  'is  a  little  longer  doing  it. 

Q.  Do  you  not  think  if  they  were  paid  more  they  would  get  a  j 
better  class  of  men?     A.  That  point  I  think  you  are  right  .in. 

Q.  How  does  the  provision  of  the  law  allowing  a  deduction  for 
just  debts  as  an  offset  operate  in  your  county?  A.  It  operates 
that  in  some  instances  they  will  make  an  indebtedness;  1  have 
heard  of  several  instances  so  that  they  can  say  they  are  in  debt, 
and  they  will  tell  you  they  owe  such  and  such  a  man  $300,  and  that 
included  about  the  tax  on  the  farm,  and  will  say  I  have  no  money  at 
interest,  but  I  have  got  my  personal  property,  horses  and  things  of 
that  sort,  and,  I  think,  the  amount  of  my  debt  would  cover  all  that 
with  the  reasonable  allowance  that  T  ought  to  have;  I  have  heard  j 
of  several  instances  of  that  kind. 

Q.  On  the  question  of  the  present  rate  of  interest;  is  the  present 
rate  of  six  per  cent  high  enough?  A.  As  far  as  I  have  had  coi 
vernation,  and  that  is  quite  a  good  deal  on  that  question,  and 
the  question  has  been  quite  generally  discussed  in  our  meeting 
the  idea  is  that  the  interest  is  too  high  for  the  agriculturist  to  pay; 
he  can  not  afford  to  pay  six  per  cent  interest. 

Q.  It  was  stated  in  New  York  that  there  was  not  any  difficulty 
in  procuring  loans  upon  real  estate  at  from  four  and  a  half  to 


281 

five  per  cent ;  has  that  been  your  experience  in  your  county?     A. 

have  heard  perhaps  twenty-five  persons  say  that  they  could 
not  get  any  money  upon  mortgage  at  that  price;  they  could  get 
>erhaps  twenty  dollars  an  acre;  it  would  not  perhaps,  in  some 
•ases,  be  more  than  two-thirds  the  amount  they  desired;  they 
xmld  get  that  amount  at  a  less  per  cent,  but  to  get  such  amounts 
is  they  desired  to  borrow  they  could  not  get  those  amounts  for 
lour  and  a  half  per  cent. 

Q.  "What  percentage  of  the  value  of  the  lands  were  they  seeking 
o  procure  loans  on?  A.  Some  of  them  wanted  to  get  thirty 
ollars  an  acre. 

Q.  What  would  be  the  value  of  the  land?  A.  On  land  worth 
fifty  dollars. 

Q.  Three-fifths?  A.  Yes,  sir;  and  some  wanted  to  get  thirty 
dollars  an  acre  on  land  worth  sixty  dollars. 

Q.  Have  you  found  that  where  an  attempt  has  been  made  to 
jrocure  a  loan  on  three-fifths  of  the  value  it  was  impossible  to 
>rocure  money  at  less  than  six  per  cent?  A.  I  have  been  told  so. 

Q.  Do  you  say  that  paying  that  rate  it  is  impossible  to  produce 
a,  fair  income  on  the  farm?  A.  Yes,  sir;  take  such  farms  us  are 
necessarily  mortgaged;  there  are  some  farms  where  they  are 
ufficiently  good  ,  and  the  farmers  upon  them  are  sufficiently  good, 
;hey  can  live  upon  them,  but  they  are  not  generally  the  farms 
overed  with  mortgages. 

By  Mr.  Guenther. 

Q.  You  are  then  in  favor  of  reducing  the  legal  rate  of  interest 
rom  six  to  five  per  cent?  A.  I  should  be  if  the  law  remains  the 
same  as  to  the  person  oAvnmg  the  property  paying  the  whole 
iinount. 

Q.  You  are  in  favor  of  taxing  bonds  and  mortgages?     A.  Yes, 

r;  and  releasing  the  farm  on  which  the  mortgage  is  to  that 
unount. 

Q.  You  are  not  in  favor  of  changing  the  law  which  permits  the 
'eduction  of  personal  tax  in  consequence  of  debt?  A.  No,  sir; 
here  are  some  questions  connected  with  this  matter;  a  man  is  in 
iebt  on  his  farm;  he  is  paying  upon  this  amount;  he  ought  to  be 


282 

released  from  that;  I  don't  see  anything  wrong  in  that;  if  I  have 
farm  worth  $6,000  and  am  in  debt  upon  it  $3,000;  I  have 
personal  property,  horses,  cattle,  farming  utensils,  etc.,  amount 
to  $1,000,  I  ought  justly  to  be  assessed  for  $4,000  only,  and 
other  man  ought  to  be  assessed  for  his  amount;  I  ought  not  to 
assessed  for  the  $6,000,  and  not  be  relieved  on  account  of  th 
personal  property  and  also  assessed  $7,000. 

Q.  Eeferring  back  to  the  general  problem  of  reduction  of 
legal  rate  of  interest,  and  taxing  bonds  and  mortgages,  in  yo 
opinion,  what  would  be  the  result;  who  would  pay  the  tax  ou  the 
mortgage,  or  who  would  be  the  sufferer  by  reason  of  the  reduction 
of  the  legal  rate  of  interest  from  six  to  five  per  cent  and  by 
reason  of  taxing  bonds  and  mortgages;  would  it  be  the  borrower 
or  the  loaner?  A.  I  thing  that  the  loaner  would  be  the  sufferer. 

Q.  If  you  wrere  to  loan  me  $1,000,  would  you  not  put  in  tlif 
difference  of  the  tax  on  the  bond  and  mortgage  and  the  difference 
in  the  rate  of  interest  from  six  to  five  per  cent  in  your  disbu 
ments,  as  you  would  the  costs  of  a  title  search  or  the  cost 
drawing  the  bond  and  mortgage  and  other  incidental  expenses; 
do  you  understand  the  question?  A.  I  do  not. 

Q.  In  case  you  were  to  loan  me  $1,000,  would  you  not  put  in 
your  disbursements  the  difference  in  the  legal  rate  of  interest 
and  the  -difference  in  the  tax  on  the  bond  and  mortgage  the  same 
as  you  would  put  in  your  disbursements  the  cost  for  a  title  search, 
the  costs  for  attorneys'  fees  and  other  incidental  expenses,  youi 
being  the  loaner?  A.  I  might  do  so  if  I  could  get  you  to  be  satis- 
fied, but  I  don't  think  it  would  be  justice  on  my  part. 

Q.  You  would  naturally  do  that?    A.  I  would  naturally  do  that 

Q.  I  would  be  the  sufferer?  A.  I  could  not  get  six  per  cent 
out  of  you;  I  would  have  to  pay  this  amount  that  you  speak  of  out 
of  my  six  per  cent. 

Q.  Would  you  not,  as  a  mntter  of  fact,  if  I  was  your  attorney. 
call  my  attention  to  this  fact  that  you  have  to  pay  this  as  a  tax 
and  that  you  are  only  going  to  get  five  per  cent  interest  instead 
of  six  —  woujd  you  not  ask  me  to  put  it  in  the  disbursements  th 
same  as  the  cost  of  a  title  search,  etc.;  and  who  would  bear  t 
burden  in  case  we  were  to  change  the  existing  laws  in  the  maitei 


283 

I  of  the  legal  rate  of  interest  and  the  matter  of  enforcing  the  tax 
?on  bond  and  mortgage?  A  Whatever  expense  there  might  be 
(to  the  changing  of  the  obligations,  etc.,  that  would  be  paid. 

Q.  By  the  borrower?  A.  He  might  be  obliged  to  pay  that; 
(that  would  depend  upon  the  desire  of  the  person  loaning  it;  it 
would  depend  upon  the  transaction  of  those  two  individuals. 

Q.  And  the  man  borrowing  has  generally  to  cater  to  the  man 
oaning?  A.  I  think  the  time  is  past  when  they  have  got  to  cater 
as  much  as  that;  there  is  a  little  more  personal  property  and  a 
ittle  more  money  seeking  outlet. 

Q.  Do  you  know  this  fact  that  you  can  borrow  money  in  certain 
>arts  of  this  State  for  four  per  cent?  A.  I  have  heard  so;  you 
can  not  do  it  in  may  county. 

Q.  Can  not  you  get  money  for  five  per  cent  on  a  piece  of 
property  say  at  fifty  per  cent  of  its  valuation?  A.  I  have  not 
heard  of  anybody  doing  it;  they  won't  loan  it  at  that  per  cent 
unless  they  get  a  larger  margin. 

By  Mr.  Hamilton. 

Q.  There  is  no  margin  for  it  at  fifty  per  cent?    A.  No,  sir. 

Q.  Do  you  believe  that  a  system  of  State  taxation  by  a  specific 
/ax  would  relieve  the  necessity  of  raising  any  tax  for  State  pur- 
K>ses  by  the  various  count fes  would  benefit  your  community? 
I  would  hate  to  answer  that  question,  because  the  conditions 
;hat  would  bring  about  a  result  of  that  kind  —  I  don't  know  what 
provisions  would  be  used,  and  I  would  not  like  to  pass  judgment 
ipon  it  until  I  saw  the  p/ovisions;  they  might  hurt  us  more 
iian  the  condition. 

Q.  It  is  real  property  that  is  suffering  under  taxation?  A. 
5Tes,  sir. 

Q.  If  means  could  be  devised  for  raising  sufficient  revenue 
)ther  than  upon  real  property  to  pay  all  the  State  disbursements, 
nrould  that  be  a  desirable  change  so  far  as  your  knowledge  is 
concerned?  A.  I  would  like  to  answer  it  the  same  way  as  before; 
I  am  firmly  of  the  opinion  that  taxation  sooner  or  later  comes 
from  the  productive  interests  of  our  State,  and  I  believe  from 
|my  study  of  the  statistics  that  the  productive  industry  is  largely 


284 

agriculture,  and  what  provisions  might  be  made  in  the  law  to 
bring  about  a  result  of  that  kind  ipight  work  upon  us  very  differ- ' 
ently  from  the  anticipated  result  when  we  first  thought  of  the? 
question,  consequently  I  would  hate  to  give  any  opinion  u] 
that  question. 

Q.  Would  such  a  specific  tax  if  raised  principally  upon  what 
is  known  as  the  direct  succession  tax  be  beneficial  to  your 
munity?  A.  I  think  anything  raised  in  that  way  certain!  v 
must  reduce  the  amount  to  be  raised  from  sources  that  w< 
have  not  got  anything  from  before,  and  it  would  not  affect 
principal  I  have  suggested;  of  course,  upon  that  basis  it  woul< 
very  likely  be  a  benefit  to  us. 

Q.  And  desirable?    A.  Of  course. 

Q.  Is  there  any  complaint  in  your  community  in  regard 
the  question  of  inequality  as  to  taxes  between  the  various  coi 
ties?    A.  Yes,  sir;  I  think  there  are  quite  a  number  of  our  peopl< 
think  that  Seneca  county,  owing  to  the  general  depreciation 
farm  lands,  is  standing  rather  high  in  the  scale. 

Q.  The  average  rate  in  your  county  is  eight  per  cent?  A,  The 
average  rate  of  valuation? 

Q.  Valuation.  A.  I  think  it  likely  stands  that  way  upon  the 
books;  there  are  three  or  four  towns  that  pretend  to  assess  at  the 
full  value  of  the  property,  and  then  there  are  other  towns  that 
vary;  I  did  not  average  that  up  yesterday. 

Q.  If  there  was  no  State  tax  to  be  raised  by  the  counties  there 
would  be  110  occasion  for  this  inequality,  would  there;  the  present 
inequality  arises  entirely  from  the  necessity  of  raising  in  each 
locality  so  much  for  State  purposes,  and  if  that  was  raised  by 
a  specific  tax  and  each  locality  then  simply  supporting  its  own 
institutions,  then  the  question  of  inequality  would  be  entirely 
removed?  A.  It  would  under  that  plan  of  taxation,  c<Ttainly, 
but  the  question  still  remains  in  rny  niind  similar  to  the  other 
as  I  have  expressed  it;  I  am  not  entirely  clear  upon  that;  I 
would  want  to  study  that  proposition  a  little  before  I  answer 
definitely. 

Q.  How  do  your  people  of  your  county  regard  the  adoption  of 
what  is  know  as  the  local  option  law  upon  the  question  of  taxa-< 


285 

ion,  and  thus  leaving  it  to  the  various  counties  to  determine 
what  property  should  be  assessable,  having  relation  to  the  ques- 
ion  of  personal  property?  A.  I  have  not  heard  it  discussed 
at  all. 

Q.  Have  you  considered  the  matter  so  as  to  be  able  to  give 
;he  committee  your  opinion?  A.  2sTo,  sir;  I  have  not  studied 
;hat  question. 

By  the  Chairman. 

Q.  Do  you  know  what  the  average  rate  of  taxation  is  in  your 
county?  A.  I  suppose  3^011  desire  to  know  simply  upon  State 
matters;  I  can  give  you  the  exact  amount,  but  it  would  have  to 
include  the  raising  of  the  sinking  funds  for  railroad  bonds  for 
which  they  have  bonded  themselves  for  three  towns;  taking  that 
n  it  would  raise  the  rate,  of  course;  it  would  be  difficult  for 
me  to  get  at  the  matter  exactly;  T  think,  taking  those  towns 
upon  the  average  of  the  other  towns  that  are  not  bonded  in  that 
way,  the  average  would  be  about  seven  dollars. 

Q.  On  a  thousand?    A.  Yes,  sir. 

Q.  Do  you  consider  that  burdensome  taxation?  A.  All  taxa- 
tion is  burdensome  if  they  assess  more  than  you  can  aiford; 
;hen  it  is  more  than  you  ought  to  pay;  it  is  just  as  burdensome 
as  the  difference  between  five  per  cent  and  six  per  cent. 

Q.  What  is  the  rate  in  your  town  for  all  purposes?  A.  six  dol- 
ars  and  thirty-seven  cents  this  year. 

Q.  What  was  it  in  1890?  A.  It  was  six  dollars  and  forty-six 
cents  in  1891  —  six  dollars  and  forty-nine  cents  last  year. 

Q.  Now,  what  proportion  of  that  is  for  the  support  of  your 
local  government?  A.  About  one  half  —  not  quite  one  half. 

Q.  T  find,  by  looking  at  the  figures  in  the  report  of  the  State 
assessors  for  1890,  that  the  aggregate  amount  for  State  taxes 
exclusive  of  schools,  and  the  aggregate  amount  of  school  tax 
added  together  only  amount  to  about  one-fifth  of  the  amount 
raised  in  your  county  by  taxation;  in  other  words,  I  find  that 
the  total  taxation  in  the  county  of  Seneca  was  $150,476.83;  that 
the  total  amount  of  State  taxes  was  $20,384.37;  the  total  amount 


286 

of   State   tax  for   school  purposes   was  $16,040.81,   aggregate 
|36,405  and  some  odd  cents,  so  that  is  only  something  over  01 
fifth  of  the  total  amount  raised  in  your  county  for  that  year; 
now,  would  it  not  appear  from  that  that  the  greater  portic 
of  that  burden,  if  it  is  a  burden,  is  for  the  expense  of  your  local 
government?     A.  Perhaps  I   made   an   error;    in   the   quesfioi 
as  to  local  government  I  had  reference  to  the  town;  I  did 
take  the  county  expenses  that  are  levied  on  the  town  into  c< 
nection  with  my  remark. 

Q.  You  own  a  farm?    A.  Yes,  sir. 

Q.  Do  you  own  any  other  real  estate  besides  the  farm? 
Yes,  sir. 

Q.  What  valuation  is  put  upon  your  farm  by  the  assessoi 
A.  Forty- seven  dollars. 

Q.  An  acre?    A.  Yes,  sir. 

Q.  I  mean  the  aggregate  valuation?    A.  One  hundred  and  tenj 
acres. 

Q.  Five  thousand  one  hundred  and  seventy  dollars?  A.  Yes, 
sir. 

Q.  Do  you  recall  the  amount  of  tax  that  you  paid  on  the  last 
assessment?  A.  Six  dollars  and  forty-nine  cents  on  the  thou- 
sand ;  the  state  tax  would  be  about  one-third. 

Q.  According  to  this  you  paid  about  thirty-three  dollars  taxes? 
A.  Yes,  sir;  from  offhand  recollection. 

Q.  You  contribute  toward  the  support  of  the  town,  county  and 
State  government  about  thirty- three  dollars?  A.  Yes,  sir. 

Q.  Now,  one-fifth  of  that  is  for  the  support  of  the  State  govern- 
ment and  the  public  school  system  outside  of  what  goes  to  the 
school  locally,  so  that  if  your  real  estate  was  to  be  relieved  from 
taxation  for  general  State  purposes,  your  relief  would  be  just  about 
one-fifth  of  your  present  burdens?  A.  It  would  appear  so  from 
the  position  in  which  you  place  it. 

Q.  My  purpose  of  pursuing  this  line  of  inquiry  is  to  ascertain 
just  what  relief  the  State  can  give  to  the  farmer;  in  other  words>< 
the  purpose  of  examining  you  gentlemen  interested  in  the  agri- 
cultural pursuits  is  to  ascertain  to  what  extent  you  are  burdened  j 


287 

by  vStuie  taxation,  and  to  what  extent  we  can  relieve  it;  now,  if 
[you  are  relieved  entirely  from  those  figures  as  to  State  taxation, 
[you  would  be  relieved  to  the  extent  of  one-fifth  of  what  you  now 
consider  it;  now,  what  would  you  say  to  the  proposition  relieving 
jreal  estate  from  taxation  for  the  support  of  the  general  State 
^government,  if  such  a  thing  can  be  done?  A.  As  far  as  it  goes, 
of  course  it  would  not  be  any  detriment  to  the  farmers  to  be 
•fettered,  but  the  great  burden  conies  in  upon  the  disproportion  of 
the  amount  that  the  real  estate  and  personal  property  pays  for 
local  expenses;  that  comes  in  all  the  way  through,  as  far  as 
local  school  tax,  and  everything,  is  concerned. 

Q.  Suppose  the  Legislature  can  devise  means  to  raise  sufficient 
Revenue  for  the  support  of  the  general  State  government  without 
levying  a  tax  upon  real  estate;  would  you  favor  the  adoption  of 
such  a  proposition?  A.  I  should  want  to  know  in  what  way  it  pro- 
poses to  do  it  before  I  did  it  —  the  means  that  you  are  going  to 
use  for  that  purpose. 

Q.  Suppose  the  Legislature  should  conclude  to  so  relieve  real 
estate  and  to  raise  money  for  the  support  -of  the  general  State 
government  from  a  tax  upon  the  earnings  of  corporations,  from 
bollateral  inheritance  and  direct  inheritance  and  such  other 
sources?  A.  I  think  as  far  as  the  inheritance  is  concerned  it 
should  no  doubt  work  very  well;  as  far  as  the  corporations  are 
X)ncerned  there  would  be  a  reaction  that  would  come  upon  the 
Drincipal  this  gentlemen  speaks  of;  they  would  have  to  receive 
nore  revenue  to  pay  that  amount,  and  it  would  arrive  at  a  heavier 
;ax  upon  transportation;  corporations  always  have  some  way  by 
which  they  get  in  the  amount  of  revenue  ne<3<essary  to  pay  their 
expenses;  in  getting  that  extra  amount  they  would  do  it  to  other 
people's  disadvantage. 

Q.  If  real  estate  was  relieved  from  contributing  to  the  support 
)f  the  general  government  would  not  that  do  away  with  all  this 
nooted  question  of  equalization?  A.  It  would  so,  as  far  as  the 
Jounties  are  concerned,  that  is  true. 

Q.  Now,  would  not  the  question  of  taxation  after  that  be 
argely  a  local  matter?  A.  It  would  be  more  so  than  now,  but 


288 

that  would  be  done  by  &  general  law  the  same  as  now,  would  it'] 
not? 

Q.  Yes,  sir;  but  suppose  the  Legislature  should  pass  a  general 
act  relieving  real  estate  from  taxation  for  general  purposes,  and 
authorizing  the  local  authorities  to  raise  their  money  for  the3 
support  of  local  government,  much  in  the  same  way  a*  they  do 
now,  would  not  that  give  some  relief  ?  A.  Yes,  sir;  it  would 
relief  from  the  amount  they  were  exempted  from  paying. 

Q.  Well,  where  does  the  burden  come  in  now;  of  course, 
farmer  claims  tha/t  he  is  paying  more  than  his  just,  share  of 
expenses  of  government;  now,  where  does  the  burden  fall  heaviest; 
is  it  what  he  is  called  upon  to  contribute  to  the  support  of 
general  government  or  the  expense  of  his  local  government! 
A.  Direct  taxation  as  to  his  local  government  which  is  very  mi 
larger;  he  is  a  sufferer,  as  I  stated  before,  in  the  first  place, 
the  difficulty  wais  more  in  getting  each  kind  of  property,  real 
personal,  to  pay  its  proportion. 

Q.  Do  you  favor  a  tax  upon  all  kinds  of  personal  property? 
On  all  kinds,  of  every  name  or  nature* 

Q.  You  believe  in  taxing  the  goods  and  chattels  of  the  fannc 
A.  Yes,  sir;  if  the  goods  and  chattels  of  the  merchant  are  as 
I  believe  in  it. 

Q.  Do  you  believe  in  taxing  stock  in  trade?    A.  Just  as  mi 
as  if  you  assess  my  money  or  my  horses  and  cattle;   that  is 
stock  in  trade;  that  is  my  capital  to  use,  and  their  stock  in 
is  their  capital  to  use. 

Q.  Don't  you  think  that  a  thriving  business  in  one  of  your1 
villages  in  Seneca  county  adds  to  the  general  prosperity?  A 
Certainly. 

Q.  And  does  not  the  man  that  has  got  $10,000  invested,  or 
$20,000  invested  in  a.  business,  contribute  more  to  the  general 
prosperity  than  a  man  that  has  the  same  amount  invested  in  land? 
A.  He  gets  it  and  it  is  used. 

Q.  Does  he  not  contribute  more  to  the  general  prosperity? 
A.  I  don't  see  how  he  does;  he  puts  that  much  capital  into  use* 
in  that  locality  and  the  people  there  use  it  for  him  and  purchase  I 


289 

t  of  him;  lie  makes  capital  of  it;   they  ought  not  to  support  him 
r  having  that  privilege. 

Q.  Supposing  that  at  Ovid  a  company  of  gentlemen  should  locate 
d  start  a  new  enterprise  with  a  capital  of  $250,000,  would  not 
do  more  good  to  the  locality  than  it  would  to  have  them 
me  there  and  buy  $250,000  worth  of  land?    A.  I  aui  not  posi- 
ve  about  that;    the  articles  that  they  produce  would  be  pro- 
uced  by  some  one,  and  they  won't  have  their  money  in  there 
less  the  proceeds  are  going  to  pay  them  a  per  cent  on  their 
oney,  and  after  they  get  that  the  people  in  whose  locality  they 
ay  locate  in  order  to  see  them  prosper  must  pay  their  taxes;   I 
nt  see  it  in  that  way. 

Q.  My  opinion  of  it  is  and  I  want  to  get  your  view  that  it 
uld  add  to  the  general  prosperity  of  the  place  and  would  gjive 
ployment  to  a  large  number  of  people,  and  put  a  large  amount 
money  in  circulation  in  Seneca  county  that  is  not  now  in  circu- 
n ;  would  it  not  add  very  much  to  the  general  good  ?    A.  That 
possibly  so;    I  might  draw  a  contrast  in  regard  to  Willard 
lum,  which  is  quite  an  institution,  and  the  farmers  were  quite 
ted  when  it  came  there,  and  it  was  located  there;  they  thought 
is  going  to  ,be  a  great  benefit  to  them  —  they  were  going  to  sell 
their  produce,  etc.;  it  has  not  proved  to  be  true  in  that  respect; 
has  proved  however,  to  be  quite  true  that  all  of  the  labor  that 
was  in  the  county  they  have  taken  there  for  employment, 
the  farmers  have  had  to  pay  at  least  twenty  per  cent  higher 
labor  and  can  scarcely  g*et  it  at  that. 

Q.  That  is  a  State  institution  and  they  have  acquired  large 
of  land  and  raised  their  own  produce?    A.  No,  sir;    they 
not  begin  to  raise  their  produce;   they  raise  a  good  deal,  but 
ship  in  there  continually;   I  do  not  complain  as  far  as  I  am 
vidually  concerned ;  corporations  have  come  in  from  Rochester 
put  in  230  acres  of  grapes  in  one  body,  150  in  another,  150  in 
.er  and  200  in  another;    they  have  planted  out  over  1,000 
,  and  other  individuals  have  from  ten  to  thirty  acres,  and  the 
t  of  that  has  not  been,  so  far  as  I  know,  to  our  advantage;  it 
37 


290 

has  been  a  detriment  to  the  whole  more  than  otherwise,  an< 
have  placed  one  of  them  at  $60,000,  and  the  amount  of 
the  others  I  do  not  know. 

Q.  You  think  that  Seneca  county  would  better  with  a 
built  around  it  than  to  have  it  as  it  is?  A.  No.  sir;  I  think  tt 
everybody  that  comes  into  a  community  the  better  it  is  for  it,  ai 
that  the  more  diversity  of  industries  there  are,  and  the  gn>;  :t< 
the  amount  in  those  industries  it  is  a  great  benefit,  but  I  thir 
that  each  industry  should  stand  upon  its  feet;  that  is  the  <>n 
difference;  I  am  very  glad  that  this  money  comes  into  our  vicimt 
but  I  do  not  want  to  pay  them  for  coming  there. 

Q.  Is  it  not  a  fact  that  the  general  benefit  derived  from  the 
coming  there,  and  from  the  circulation  of  the  money  that  the 
presence  brings  into  the  community,  is  more  benefit  than  1} 
amount  of  tax  you  get  out  of  it?  A.  That  does  not  alter  tl 
justice  of  the  tax;  if  they  find  a  community  in  which  they  loca 
it  ought  to  have  the  benefit  of  it;  they  know  the  benefit  of  the 
location  and  the  benefit  of  their  industry,  and  if  we  receive  ai 
benefit  by  being  in  proximity  why  it  should  be  our  good  fortui 
we  should  not  be  obliged  to  pay  their  taxes  to  receive  t| 
benefit. 

By  Mr.  Guenther. 

Q.  You  are  familiar  with  the  tax  laws  of  the  State?    A.  Fail 
familiar. 

Q.  You  have  no  suggestion  in  mind  beyond  the  listing 
as  to  an  amendment  to  the  present  tax  laws?    A.  I  only  heai 
this  committee  the  day  before  yesterday,  and  I  have  not  look* 
up  in  a  manner  to  form  any  particular  idea  of  that. 

By  the  Chairman. 

Q.  I  understand  you  to  recommend  that  there  ought  to  be 
allowance   for  indebtedness   both   on   real   estate   and   pers 
property?    A.  You  did  not  understand  me  correctly;  I  thoi 
that  all  personal  property  and  all  real  estate  should  be 
for  its  value. 


291 

>    Q.  Suppose  that  your  farm  is  worth  $10,000,  and  there  is  an 
jmcumb  ranee  of  $5,000  on  it;  do  YOU  consider  that  you  ought 

0  PJIV  on  the  value  of  $10,000,  or  on  the  value  of  your  equity 
55.000?     A.  I  think  I  ought  to  pay  on  $5,000. 

Q.  That  is  what  I  mean  by  allowance  for  indebtedness;  you 
,hink  that  indebtedness  ought  to  be  taken  into  consideration,  and 
Srou  ought  to  be  allowed  for  it?  A.  I  do  not  understand  the 
meaning  of  it  the  same  as  you  do;  as  I  understood  it  in  the  past, 
ft 'was  that  if  I  was  in  debt  on  my  personal  property  I  would  be 
released  for  that  amount;  on  that  basis  I  understood  your 
Question. 

I  Q.  You  recommend  that  the  law  ought  to  be  so  fixed  that  a 
\  lan  would  only  pay  on  the  basis  of  the  value  of  his  equity  in  the 
unl?     A.  Yes,  sir. 

1  Q.  Suppose  your  neighbor  had  $10,000  worth  of  personal  prop- 
jrty,  and  when  the  assessor  came  around  he  could  truthfully 

:  that  he  was  indebted  to  the  extent  of  $5,000,  do  you  think 

« 

mat  in  assessing  his  personal  property  he  ought  to  be  allowed  a 

lioii  (if  .^.I.OOO?     A.  If  he  had  paper  in  his  possession  worth 

00,  and  he  was  worth  only  $5,000,  certainly  he  should  not 

jay  only  $5,000;  he  had  $5,000  in  his  paper;  I  had  $5,000  in  my 

i  Q.  You  think  there  ought  to  be  an  allowance  for  debt  in  either 
A.  Yes,  sir;  I  say  that  nobody  should  pay  a  tax  twice. 

Jy  Mr.  Hamilton. 

Are  you  proceeding  upon  the  theory  that  that  is  paying  the 
:wice?  A.  If  it  is  assessed  once  on  the  mortgage  on  my 
of  $5,000,  and  it  is  worth  $10,000,  and  the  assessor  assesses 
;ie  $10,000,  and  turns  around,  assesses  him  $5,000  for  his  mort- 

ige,  I  think  you  get  a  tax  twice  on  that  $5,000 ;  he  pays  a  tax  and 

do  upon  the  $5,000. 

Q.  Examine  the  question  a  little  farther;  you  start  out  and  have 

10,000  in  money  and  I  have  $10,000  in  real  estate;  under  the 
nt  law  they  are  both  subject  to  taxation,  are  they  not?  A. 

es,  sir. 

Q.  And  you  believe  properly  so?    A.  Yes,  sir. 


292 

Q.  You  loan  me  $10,000,  which  is  a  taxable  asset,  from  whicl 
the  State  has  a  right  to  derive  its  share  of  support,  and  I  give  yoi 
a  mortgage,  do  you  believe  that  you  should  therefore  esca] 
taxation?    A.  I  should  think  I  should  be  made  to  find  out 
became  of  my  farm;  you  started  upon  the  proposition  that  tki 
farm  I  have  possession  of  is  mine  in  fee  simple. 

Q.  I  give  you  $10,000  in  cash,  and  I  take  the  farm  myself? 
You  said  I  had  the  farm,  and  you  had  the  $10,000;  that  is 
understood  your  proposition. 

Q.  I  want  to  see  how  you  make  it  double  taxation;  you  liai 
$10,000  in  cash?    A.  Yes,  sir. 

Q.  I  have  a  $10,000  farm?    A.  Yes,  sir. 

Q.  Your  idea  is  that  both  of  those  kinds  of  property  shoi 
pay  their  share  towards  the  support  of  the  government? 
Yes,  sir. 

Q.   Yon  lend  what  you   have   and  take  security  for  it? 
Yes,  sir. 

Q.  ShovJd  that  $10,000  cease  to  contribute  its  share  towai 
the  support  of  the  government?  A.  You  give  me  to  understai 
the  position;  how  do  you  get  the  farm? 

Q.  Any  way  that  you  propose;  I  might  have  inherited  it 
bonjxht  it?    A.  It  is  yours  in  fee  simple. 

Q.  Yes,  sir.     A.  Now,  the  question  is  if  you  had  that  in 
simple. 

Q.  1  borrow  your  $10,000  and  that  fund  which  was  taxable  th< 
after  escapes  taxation;  is  that  right?    A.  They  should  both 
be  taxed  for  the  reason  that  you   are  hiding  the  farm  undd 
cover  of  the  mortgage. 

Q.  T  borrow  it  to  go  into  business.     A.  Then  you  should 
assessed  for  the  $10,000  that  you  have  got. 

Q.  The  law  says  it  shall  be  declared  an  offset  and  I  should  not 
assessed.     A.  That  is -all  right. 

Q.  You  believe  that  the  two  funds  whether  they  are  real  o| 
personal  property  should  be  assessed  wherever  they  are  found' 
A.  I  don't  think  you  can  change  that  in  that  way ;  it  is  possible  yoi 
may  do  it,  but  in  justice  it  ought  not  to  be  allowed. 


293 

\.  Do  you  believe  that  personal  or  real  property  should  be 
wherever  it  is  found?  A.  I  believe  that  the  amount 
|f  personal  or  real  property  should  be  assessed;  now,  you  change 
the  matter;  you  take  away  a  $10,000  farm  and  turn  it  over  to 
lim  for  his  $10,000,  then  you  retain  possession;  it  is  the 
jioney  that  is  being  assessed;  it  is  not  the  individual. 

Q.  Whose  money  is  that  has  gone  in  the  business?     A.  After 

m  have  had  it  in  your  business  it  is  yours. 

Q.  P  it  is  mine  I  can  give  it  away?  A.  It  is  yours  as  far  as  >ise 
\\  concerned  in  that  way;  I  don't  think  you  can  hide  property 
[iirly  and  justly. 

Q.  Are  there  any  instances  in  your  community  where  capital 

is  been  driven  from  the  State  by  taxation  affecting  corporations? 
"Not  that  I  know  of. 

Q.  Ha\e  you  any  suggestions  to  make  in  regard  to  existing  laws 

new  laws  —  which  will  increase  the  revenue  of  the  government? 
[«  No,  sir. 

Q.  Have  you  any  other  suggestions  to  make  on  any  question 
i'hieh  havf  not  been  called  to  your  attention  by  the  committee 
jliich  will  affect  taxation?  A.  No,  sir. 

Newton  H.  Green,  called  as  a  witness,  being  iiuly  sworn,  testi- 
as  follows: 

Ify  Mr.  Hamilton. 

Q.  Whore  do  you  reside?    A.  South  Byron,  Genesee  county. 
Q.  Hov  long  have  you  resided  there?    A.  I  was  born  there. 
Q.  What  is  your  occupation?     A.  Farmer. 
Q.  How  long  have  you  been  so  engaged)?    A.  All  my  life. 
Q.  Do  you  own  a  farm?     A.  Yes,  sir. 
Q.  More  than  one?     A.  Only  one. 

Q.  Have  you  been  in  public  office  connected  with  the  question  of 
tat  ion?  A.  I  was  assessor,  quite  a  good  many  years  ago  I  was 
ipervisor. 

Q.  How  long  were  you  supervisor?     A.  Five  terms. 
Q.  And  assessor  ?    A.  I  was  assessor,  I  think,  two  terms  —  six 
—  a  good  many  years  ago. 


294 

Q.  Have  you  given  attention  to  the  question  of  taxation? 
Somewhat  so. 

Q.  Art1  you  a  member  of  the  State  Grange?     A.  I  belong 
subordinate  grange. 

Q.  And  have  for  how  long?    A.  Two  years. 

Q.  What  have  you  to  say  as  to  the  propriety  of  modifying  tl 
present  laws  relating  to  taxation,  assessment  and  interest,  so 
as  they  affect  the  agricultural  and  other  interests  of  the  State 
A.  L  should  say  this,  modify  the  existing  law  so  as  to  raise  a  stu 
sufficient  to  pay  the  State  tax  by  the  modification  or  contiu^ 
ance  of  the  collateral  inheritance  tax  or  corporation  tax,   ai 
leave  the  question  of  local  taxation  to  each  county;  then,  I  thiij 
we  can  correct  the  question  of  equalization, 

Q.  Does  that  sentiment  prevail  in  your  county?  A.  I  thidj 
so;  it  is  growing;  the  question  has  not  been  discussed  until  quj 
recently,  but  it  meets  with  general  favor. 

Q.  They  recognize  the  fact  that  the  inequality  which  oecud 
now  would  thereby  be  abolished?     A.  Yes,  sir;  we  feel  that  m 
our  county,  particularly  where  the  State  Board  of  Equalizati< 
added  to  our  county  something  like  3,000,000,  a  small  county  lil 
that 

Q.  It  is  charged  that  you  are  assessed  about  fifty-live  p<] 
cent?  A.  Yes,  sir. 

Q.  What  cause,  if  any,  can  you  ascribe  to  the  depreciaticl 
of  i'arm  land  in  your  county  during  the  past  twelve  .rears,  aboij 
one-third?  A.  It  is  to  tUe  lessened  receipts,  I  suppose. 

Q.  How  far  has  the  question  of  taxation  contributed  to 
effect?     A.  Not    so   seriously,   I   think;    taxation   is   not   opprc| 
sively  high  in  our  county. 

Q.  How  is  the  market  for  land  in  your  county?  A.  Practical] 
no  market;  in  fact,  none  except  an  occasional  case  \vhere  a  f<jj 
closure  or  division  of  an  estate  by  the  heirs. 

Q.  On  the  question  of  taxation  in  regard  to  personal  proper] 
does  it  escape  its  just  share  of  taxation  in  your  county  unf 
the  present  law?    A.  In  portions  of  our  county  perhaps  it  p 


295 

a  very  small  per  cent;  in  our  town  there  is  not  much  escape; 
-re  is  nor  much  personal  property  aside  from  the  farmer's  tools, 
j  which  I  think  should  not  be  taxed. 

Q.  1-Jut  money  and  capital?  A.  In  our  town  I  think  forty  to 
fifty  per  cent  —  perhaps  fifty  per  cent  of  the  personal  property 
pays  tax;  I  think  in  some  towns  in  the  county,  in  the  wealthier 
towns.  I  should  presume  a  large  amount  escaped  taxation. 

Q.  Is  that  principally  in  mortgage  indebtedness  or  other  forms? 
A.  There  is  some  mortgage  indebtedness,  but  the  large  amounts 
loaned  upon  farming  lands  in  our  locality  are  held  by  the  savings 
banks;  of  course,  there  are  individual  mortgages,  bat  the  bulk 
|of  it  is  there. 

Q.  Is  this  evasion  of  its  share  of  tax  by  personal  property 

nibutable  to  the  present  laws  or  the  enforcement  of  them? 

.  It  is  a  long  established  custom;  the  laws  are  good  enough 

enforced;  if  an  assessor  follows  up  personal  property  too  close 
he  may  not  be  elected. 

Q.  Would  the  question  of  election  of  assessors,  if  avoided,  rem- 
edy the  difficulty?  A.  I  think  it  would  hardly;  as  I  said  before, 
give  us  an  opportunity  to  raise  the  money  to  pay  our  own  raxes 
and  no  mon>  and  \ve  would  correct  that  inequality. 

Von  believe  that  would  be  the  solution?     A."  I  think  so. 
1^  the  sentiment  of  your  community  in  favor  of  the  adoption 
| of  the  listing  system?     A.  It  lias  its  advocates,  but  not  a  majority 
of  our  people. 

O.  What 'is  your  opinion?  A.  I  should  not  favor  it  as  applied 
to  an  agricultural  community. 

O.  As  to  the  question  of  interest;  what  is  your  idea  as  to  the 
presi-nr  rate?  A.  The  opinion  prevails  that  the  earning  power 
of  money  at  live  per  cent  is  greater  than  an  investment  in  farm- 
in:-:  lands;  a  majority  of  the  farm  lands  in  our  section  do  nor 
pay  tlm-e  per  cent  on  the  value;  they  do  not  pay  live  per  cent 
on  th»-  assessed  value;  [  can  safely  say  iliat. 

Q.  Xet  or  gross?  A.  Xet  ;  I  have  heard  people  say  that  is 
only  about:  fifty  per  cent  of  actual  value. 


296 


Q.  How  does  the  present  rule  allowing  the  deduction  for  indel 
edness  in  your  community  take  in  regard   to   the   question 
taxation  upon  personal  property?     A.  It  has  its  influence,  I  si 
pose,  to  reduce  the  amount. 

Q.  Is  it  used  as  a  shield  to  evade  the  payment  of  taxes? 
Not  particularly. 

Q.  Why  is  it  that  personal  property  escapes  in  your  count/ 
if  the  law  is  ample  and  if  evasive  means  are  not  employed?    A.< 
It  is  inherent  in  human    nature,  I  suppose,  to  escape  payment  of 
taxes  on  personal  property  it  has  always  been  so  far  as  my 
observation  goes. 

Q.  Your  idea  is  that  eacli  county  should  raise  its  tax  for  its 
own  need;  would  you  include  in  that  what  is  known  as  the  local< 
option  law?  A.  No,  sir;  I  haVe  never  given  that  my  observation^ 

Q.  That  is  a  law  which  provides  that  each  county  shall  deter^ 
mine  at  what  rate  it  shall  be  assessed?  A.  I  suppose  that 
might  follow  when  the  State  tax  was  paid  by  collateral  inherit-, 
ance  and  corporate  tax;  each  county  would  certainly  know  who 
paid  it. 

Q.  Do  you  believe  that  the  community  in  which  you  liv« 
would  be  in  favor  of  an  increase  of  the  inheritance  tax  TO  a 
sufficient  degree  to  pay  ail  the  taxes  for  State  purposes?  A. 
I  don't  think  I  should  favo^  that  wholly,  because  I  should  think 
there  would  be  some  derived  from  the  corporation  tax  which 
would  be  as  just  as  the  other. 

Q.  Do  you  think  that  a  proportionate  increase  in  the  inherit! 
ance  tax  together  with  oilier  interests  would  be  desirable  in 
your  community  for  the  purpose  of  paying  the  State  tax?  A 
Yes,  sir. 

Q.  Do  yon  believe  that  the  sentiment  of  your  community 
would  support  a  tax  upon  inheritance  on  real  estate  which  is 
now  exempt?  A.  I  should  question  that;  my  attention  was  called 
yesterday  by  the  county  clerk;  he  called  my  attention  to  a  case 
where  it  was  being  passed  upon  where  I  thought  it  was  practi- 
cally an  injustice;  I  should  hardly  want  to  commit  myself  in  favor 
of  that. 


Q.  Are  you  giving  us  the  result  of  your  conversation  with, 
your  neighbors  or  the  community,  or  simply  your  personal  idea 
on  that  question?  A.  I  should  be  in  favor  of  increasing  the 
tax;  for  instance,  these  large  estates  I  think  they  could  afford 
to  pay  more  than  they  are  now  paying. 

Q.  You  believe  in  what  is  known  as  a  graded  tax?  A.  I 
should. 

Q.  The  present  inheritance  law  exempts  real  estate  in  the 
direct  line  of  succession;  would  your  community  favor  an  amend- 
ment imposing  some  tax  upon  that?  A.  I  hardly  think  it  would. 

Q.  Do  you  know  of  any  case  where  capital  has  been  driven 
from  the  State  in  your  community  by  reason  of  the  restrictions 
affecting  corporations?  A.  No,  sir. 

Q.  Have  you  any  suggestions  as  to  amendments  to  the  present 
law  or  new  laws  which  will  increase  the  revenues  of  the  govern- 
ment? A.  Only  so  far  as  I  have  outlined  in  regard  to  the 
mheritance  tax  and  corporations. 

By  Mr.  Guenther. 

*Q.  Do  you  believe  in  taxing  bonds  and  mortgages?  A.  I  can 
| not  say  that  I  do. 

Q.  In  the  event  of  reducing  the  rate  of  interest  from  six  to 
| five  pei'  cent  who  could  stand  the  burden  of  that  reduction; 
I  would  it  be  the  lender  or  the  borrower  ?  A.  I  would  say  the 
borrower  will  always  be  a  slave  to  the  lender;  of  course,  the  same 
objection  was  made  when  they  reduced  it  from. seven  to  six  that 
[they  make  now  in  going  from  six  to  five. 

Q.  It  depends  largely  on  the  maker  of  the  loan  and  the  value 
lof  the  risk?  A.  Yes,  sir;  if  a  man  has  ample  security  he  can  in 
|a  measure  dictate  terms. 

Q.  Is  there  any  difficulty  for  you  to  go  to  Buffalo  or  Rochester 
get  a  loan  of  fifty  per  cent  value  of  the  farm,  the  interest  being 
ivc  per  cent?     A.  Except  they  are  a  first  class  loan  and  at  a 

valuation. 

Q.  Yon  do  not  think  it  would  be  advisable  to  lower  the  rate 
38 


298 

of  interest  five  per  cent  and  then  tax  the  mortgage  as  well? 
I  don't  believe  that  would  work  to  the  benefit  of  the  man  tl 
gave  the  mortgage,  as  a  rule. 

Q.  Then  you  would  recommend  that  the  system  of  collect! 
State  and  local  taxes  be  divorced?     A.  I  think  so;  I  think  11 
would  be  a  benefit. 

Q.  What  would  you  say  to  so  amend  the  law  that  real  estal 
would  be  relieved  entirely  from  taxation  for  State  purposes  a] 
also  for  school  purposes  so  far  as  the  State  was  concerned,  ai 
leave  the  expense  of  the  education  of  the  children  to  the  locali 
ties?  A.  Well,  perhaps  that  might  be  unfair;  of  course,  theoret- 
ically, perhaps,  it  would  be  fair,  but  practically  it  would  be 
unfair;  I  think  it  would. 

Q.  Suppose  that  the  real  estate  of  the  county  of  Genesee  wa? 
relieved  from  contributing  anything  towards  the  support  of  tin 
State  government,  would  it  not  seem  to  be  fair  and  equitable  that  | 
they  should  defray  the  expense  of  their  own  local  government, 
including  their  school  system?     A.  Yes,  sir;  as  I  said  before,  it; 
would  seem  so,  but  practically  whether  it  would  be  so  or  not   I 
somewhat  question. 

Q.  I  did  not  ask  the  question  with  a  view  as  to  whether  i« 
would  be  satisfactory  to  the  people  of  any  particular  county;  I 
asked  it  with  a  view  of  getting'  your  better  judgment  as  who  then 
it  would  not  be  fair  and  equitable  that  each  county  should  take 
care  of  its  own  local  affairs,  and  should  bear  whatever  burden 
such  care  devolved  upon  it?  A.  I  think  if  that  condition  of 
things  existed  we  should  correct  many  inequalities  of  the  present 
system  of  taxation. 

Q.  In  other  words,  if  we  are  to  raise  revenues  for  the  supp-rt. 
of  the  State  government  from  sources  such  as  we  have  discussed  — 
tax  on  corporations,  inheritances,  etc.,  can  you  conceive  of  any 
idea  why  the  county  of  Westchester  should  contribute  any  more 
school  purposes  than  is  actually  necessary  to  maintain  her  own 
school  system?  A.  Just  as  much  as  you  could  with  the  same 
propriety  whatever  she  now  contributes  to  the  support  of  the 


State  government ;  what  I  mean  by  that  is  that  certain  localities, 
by  being  centers,  accumulate  wealth ;  for  instance,  by  the  power  or 
rights  or  privileges  of  certain  franchises,  and  that  the  whole 
State  is  interested  and  the  earnings  or  dividends  should  go  back 
over  the  whole  State. 

Q.  But  we  have  proposed  to  tax  those  corporations  and  com 
panies  for  the  support  of  the  general  government?  A.  As  to  local 
expenses  each  to  pay  its  own. 

Q.  You  agree,  however,  that  the  State  educational  institutions, 
normal  schools,  for  instance,  the  State  ought  to  pay  for  them, 
because  it  is  for  the  general  good;  but  the  education  of  children 
in  the  public  schools  is  entirely  a  local  matter,  is  it  not?  A.  You 
may  take  the  district  school  as  it  is,  but  when  you  go  to  those 
union  schools  —  expensive  schools  —  almost  universities,  you  might 
say  —  I  don't  know  that  they  are  legitimately  and  properly  a 
local  tax.  • 

Q.  But  are  not  the  union  free  schools  expensive  simply  because 
the  people  living  in  the  district  have  so  willed?  A.  It  is  notorious 
to-day  that  the  maintenance  of  a  little  district  school  in  our  dis- 
trict that  had  pupils  not  to  exceed  ten  for  the  entire  season  cost 
more  to  maintain  than  it  did  thirty  years  ago  for  our  county  and 
State  taxes. 

Q.  Then  your  idea  would  seem  to  indicate  that  if  the  expense  of 
maintaining  the  school  system  was  entirely  a  local  one  that  it 
would  lead  to  economy  ?  A.  I  think  so. 

Q.  And  that  this  idea  of  leaning  upon  other  communities  for 
support  breeds  extravagance?  A.  I  think  so. 

Q.  Do  you  think  the  people  of  Genesee  county  would  be  entirely 
satisfied  if  their  real  estate  was  relieved  from  the  burdens  of 
taxation  for  State  purposes,  and  if  they  were  also  left  to  main- 
tain their  own  schools?  A.  That  is  an  open  question;  I  do  not 
know  as  iliry  would  be  satistird.  because  there  aiv  always  chronic 
grumblers. 

By  Mr.  Stranahan. 

Q.  Would  not  they  regard  it  as  a  bad  trade  to  get  rid  of  the 
payment  of  State  taxes  and  assume  the  burden  of  their  own 
schools?  A.  I  am  inclined  to  think  they  would;  yes,  sir. 


300 


Q.  You  spoke  of  a  large  portion  of  the  mortgages  being  held 
by  the  savings  banks  in  your  county;  what  have  you  to  say  wi1 
reference  to  taxing  deposits  in  savings  banks?    A.  I  don't  knoi 
as  that  would  be  advisable;    we  have  no  savings  banks  in  oui 
county. 

Q.  What  is  your  idea  with  reference  to  the  popular  sentiment 
upon  that  question;   should  they  or  not  be  taxed?    A.  I  hardl: 
think  that  would  be  the  sentiment;  you  mean  the  deposits? 

Q.  Yes,  sir.    A.  I  hardly  think  that  would  be  the  sentiment. 

Q.  What  would  you  think  of  a  policy  of  raising  the  money 
necessary  for  the  State  government  by  putting  a  small  tax  upon 
the  bonded  indebtedness  of  corporations,  say  one  mill  on  a  dollar, 
ten  dollars  on  ten  thousand?  A.  I  don't  know  anything  wrong 
about  that. 

Q.  Do  you  think  that  would  be  a  proper  place  to  impose  an 
additional  burden  for  the  purposes  of  taxation?  A.  I  think  it 
would  reach  a  large  block  of  money  that  escapes  now. 

Q.  Are  you  at  all  familiar  with  the  bill  that  has  been  favored 
by  the  comptroller  for  the  last  two  or  three  years  on  that  subject? 
A.  I  have  not  given  the  subject  a  great  deal  of  thought. 

Q.  In  what  direction  do  you  think  the  present  inheritance 
laws  should  be  amended  in  reference  to  taxation?  A.  Increase 
it  on  large  sums. 

Q.  Direct  inheritance  or  collateral  or  both?  A.  Both;  that 
is,  on  personal. 

Q.  Now,  I  believe  the  direct  inheritance  in  cases  of  over 
$10,000  is  taxable  one  per  cent?  A.  That  is  so. 

Q.  What  would  you  make  that?    A.  I  would  graduate  it. 

Q.  Do  you  think  that  smaller  sums  than  $10,000  should  be 
taxed?  A.  No,  sir. 

By  Mr.  Guenther. 

Q.  What  do  you  think  about  taxing  the  surplus  of  savings 
banks?  A.  I  think  if  you  did  they  would  build  less  palatial  insti- 
tutions throughout  the  country;  I  think  the  surplus  belongs  to 
the  State  in  one  sense;  if  you  can  not  get  it  any  other  way  tax  it. 

Leonard  Burdtt,  called  as  a  witness,  being  duly  sworn,  testified 
as  follows: 


By  Mr.  Hamilton. 

Q.  Where  do  you  reside?    A.  Spencerport. 

Q.  Monroe  county?    A.  Yes,  sir. 

Q.  And  your  business?    A.  Farming. 

Q.  How  long  have  you  been  so  engaged?  A.  A  great  many 
years. 

Q.  You  have  also  been  a  member  of  the  board  of  supervisors 
of  your  county?  A.  Yes,  sir. 

Q.  For  what  tune?    A.  Nine  or  ten  years. 

Q.  Have  you  acted  as  assessor?     A.  Yes,  sir. 

Q.  How  long?    A.  That  might  have  been  ten  years. 

Q.  You  also  acted  as  representative  in  the  House  of  Assembly 
A.  Yes,  sir;  some  years  ago. 

Q.  How  many  terms?    A.  Three  terms. 

Q.  Are  you  a  member  of  the  Sta>te  grange?  A.  I  am  a  member 
of  a  subordinate  grange. 

Q.  Have  you  given  attention  to  this  question  of  taxation  in  any 
of  its  various  forms?  A.  Y^es,  sir;  perhaps  as  much  as  the  average 
farmer;  I  don't  claim  to  be  an  expert,  however. 

Q.  Your  experience  has  called  you  directly  in  contact  with  the 
question?  A.  Yes,  sir. 

Q.  What  have  you  to  say  as  to  the  propriety  of  modifying  the 
present  laws  regarding  taxation,  assessment  and  interest  so  far 
as  they  aifect  the  agricultural  and  other  interests  of  the  State? 
A.  If  the  commission  will  allow  me  I  will  say  that  from  my  study 
of  the  question  I  should  adopt  either  one  of  two  plans  that  I 
should  get  the  Legislature  to  carry  out;  as  I  read  the  tax  laws 
now  they  appear  to  be  explicit  and  plain,  and  if  I  could  by  any 
influence  induce  the  assessors  to  assess  all  property  of  the  State 
of  New  York,  I  do  not  think  the  farmers  would  complain  of  the 
assessment  laws  or  of  taxation ;  if  that  could  be  done  under  our 
present  law  I  should  favor  that;  let  all  the  property  of  the  State 
of  New  York  pay  its  proportion  of  the  burdens  of  the  State;  if 
that  could  not  be  done  under  the  present  law;  I  would  favor  cor- 
porations of  the  State  of  New  York  paying  the  State  taxes,  and 
let  the  counties  take  care  of  their*  expenses  as  they  saw  fit. 


302 


Q.  Is  it  your  experience  that  a  large  portion  of  the  property  in 
the  State  does  not  pay  its  share  of  taxation?    A.  I  am  not 
financial  man,  but  I  must  say  when  the  financial  officers  of  th( 
State  of  New  York  tell  the  Legislature  in  about  as  plain  languaj 
as  it  can  be  put  that  aboat  two-fifths  of  the  property  of 
State  of  Xew  York  escapes  taxation  I  am  inclined  to  believe  it. 

Q.  You  are  referring  now  to  the  report  of  the  Comptrolh 
and  State  Assessors  who  claim  that  the  amount  of  persoi 
property  in  the  State  is  practically  equal  to  the  amount  of  real, 
estate  assessed?  A.  I  have  perhaps  no  better  evidence  than 
their  report. 

Q.  Does  this  properly  escape  owing  to  the  present  condition 
of  the  laws  or  to  the  lax  administration  of  them  by  the  assessors 
and  other  officials?  A.  There  has  been  an  encouragement  in 
my  view  on  the  part  of  the  Legislature  to  allow  business  interests 
to  escape;  it  is  one  of  the  ideas  that  not  only  pervade  the  Legis- 
lature, but  it  pervades  the  Communities:  it  is  thought  that  any- 
thing that  can  be  done  to  encourage  the  building  up  of  business 
for  the  benefit  of  the  country  and  perhaps  the  general  com- 
munity; there  has  been  a  disposition  to  give  that  particular 
encouragement  by  escaping  all  assessment  and  taxation  until  the 
assessors  perhaps  have  had  a  disposition  to  slide  over  a  class  of 
assessments,  and  the  general  community,  because  they  are  looked 
upon  as  a  particular  encouragement  to  their  village  or  general 
community. 

Q.  Then  your  view  is  it  is  owing  to  an  insufficient  enforcement 
of  the  law?  A.  Yes,  sir;  that  is  it  in  a  word;  it  is  a  matter  of  a 
good  deal  of  doubt  in  my  mind  whether  a  full  assessment  of  all 
the  property  in  the  State  that  may  be  liable  under  the  law  can 
ever  be  enforced  under  this  system;  in  order  to  do  that  you  must 
start  anew. 

Q.  What  methods  occur  to  you  to  bring  about  the  necessary 
exchange  in  lhat  respect?  A.  I  don't  think  it  can  be  done. 

Q.  You  do  not.  think  that  legislation  could  cover  that?  A. 
Ko,  sir. 

Q.  As  to  the  taxation  of  mortgages,  what  is  the  sentinien: 
of  your  community  as  to  that?  A.  I  think  the  general  sentiment 
of  Western  Xew  York  is  that  they  should  pay  their  share. 


303 

Q.  What  is  your  opinion  as  to  whether  or  not  they  do  pay  ilieir 

proportion?     A.  As   remarked  by    Mr.    (liven,    there    is    quite    a 

largo  proportion  —  I  scarcely  know  just    what    proportion  —  held 

, i vin^s  banks;  the  Rochester  Savings   Hank  must   be  holding 

15,000,000.  I  should  think,  of  real  estate  securities. 

Q.  Apart  from  the  mortgages  held  by  savings  banks?  A.  The 
loan  associations  of  Rochester  have  been  loaning  money  more 
than  the  savings  banks  for  the  last  five  years;  I  don't  think  they 
are  assessed;  possibly  they  may  be  assessed  for  local  improve- 
ment's, but  I  don't  think  they  are  for  general  purposes,  and  the 
individual  mortgages,  possibly,  ten  per  cent  of  them  are  assessed, 
and  the  others  escape  one  way  or  another. 

Q.  What  are  the  sentiments  of  your  community  in  regard  to 
the  present  rate  of  interest  as  to  whether  any  change  should 
be  made  in  the  rate?  A.  The  general  sentiment  would  be  that 
there  should  be  a  change. 

Q.  In  what  direction?  A.  To  five  per  cent;  I  don't  think  any- 
other  change  is  contemplated,  is  there? 

Q.  A  change  was  suggested  by  not  making  any  legal  rate,  but 
leave  it  to  private  agreement;  how  would  that  strike  you?  A. 
Twenty  years  ago  it  would  have  been  a  good  thing. 

Q.  Considering  it  from  the  standpoint  of  the  present  day,  what 
do  you  think  of  it?  A.  Well,  it  is  a  fact  that  good  security  now 
secures  money  at  five  per  cent;  if  a  gentleman  successful  in 
business  in  this  country  can  secure  money  at  five  per  cent,  why 
should  not  a  farmer,  W7ho  is  struggling  along  under  a  load  which 
it  is  a  question  whether  he  can  get  out  of  or  not  —  why  should  he 
not  have  five  per  cent? 

Q.  But  my  question  was,  what  would  you  think  of  wiping  out 
the  question  of  legal  rate  of  interest  altogether,  and  leave  it  to  the 
borrower  and  the  lender  to  fix  it  by  agreement?  A.  I  am  speak 
ing  as  a  farmer. 

Q.  I  ask  you  as  a  fanner?  A.  As  a  farmer,  I  don't  think  the 
farmers  would  approve  of  it  at  present;  it  is  a  fact  well  known 
that  the  general  farming  interests,  in  Monroe  county  for  instance, 


304 

and  as  you  gentlemen  know  Monroe  county  is  as  good  an  agri- 
cultural county  as  there  is  in  the  state;  it  is  so  good  a  counl 
that  the  farm  lands  of  Monroe  county  are  assessed  to-day 
.seventy  dollars  an  acre  throughout;  I  give  you  that  fact;  n< 
withstanding  that  there  are  a  great  many  of  them  who  are  iu  debt, 
and  wherever  there  is  a  chance  for  the  lender  to  call  in  his  obliga- 
tions he  is  quite  liable  to  do  it,  because  he  wants  better  security: 
you  can  readily  understand  that  all  that  kind  of  securities  are  at 
six  per  cent,  and  all  that  kind  of  men  want  five,  and  they  are  a 
pretty  large  part  of  the  man. 

Q.  You  think  if  the  law  did  not  fix  the  rate  that  the  fanner 
would  have  difficulty  in  obtaining  a  loan  at  even  the  rate  of  six? 
A.  Yes,  sir.  j 

Q.  And  that  it  is  to  the  interest  of  the  farmer  that  there 
should  be  a  fixed  rate,  judging  from  the  present  day?  A.  There 
are  so  many  of  the  securities  against  real  estate  to-day  that  the 
local  institutions  and  the  lenders  would  a  great  deal  rather  have 
the  money  than  the  securities;  that  it  would  not  be  possible  for 
a  man  for  one-half  of  his  farm  value  to  get  any  kind  of  a  loan  on 
that  security. 

Q.  The  condition  of  the  farmer  to-day  in  the  State  of  New  York 
is  not  as  good  as  it  was  some  years  ago,  is  it,  upon  an  average? 
A.  Just  as  good  for  living,  but  they  can  not  pay  any  debts;  we 
raise  all  we  wrant  to  eat,  and  buy  as  good  clothes  as  we  can,  but  we 
can  not  pay  debts,  because  our  income  is  so  reduced,  owing  to  the 
question  of  competition  perhaps  more  than  anything  else. 

Q.  That  is  why  I  asked  you  whether  the  condition  of  the  average 
farmer  was  as  good;  I  had  in  mind  of  course  his  financial  situa- 
tion—  whether  he  is  as  prosperous  to-day  on  the  average  as  he 
was  fifteen  or  twenty  years  ago;  is  his  earning  capacity  as  great 
on  the  same  farm  as  it  was  fifteen  or  twenty  years  ago? 
No,  sir. 

Q.  The  indebtedness  of  the  tanner  has  increased?    A.  I  doi 
think  farming  indebtedness  has  increased  within  five  years  mu< 


305 

By  Mr.  Guenther. 

Q.  Is  it  not  the  case  that  the  condition  of  the  farmer  to-day 
financially  is  not  as  good  as  it  was  fifteen  or  twenty  years  ago; 
I  that  it  cost  more  to  run  the  farm  than  it  did  fifteen  years  ago? 
A.  No ;  it  don't  cost  any  more. 

Q.  Machinery,  etc.?  A.  Yes,  sir;  we  pay  more  for  machinery, 
but  by  machinery  we  employ  less. 

Q.  Is  that  a  fact?  A.  Yes,  sir;  if  it  was  not  a  fact,  at  the 
present  wages  we  could  not  do  it. 

By  the  Chairman. 

Q.  Has  not  the  farmer  in  the  State  of  New  York  suffered  some- 
what from  the  tendency  of  the  boy  as  soon  as  he  grows  up  to  go  to 
ie  large  business  centers?    A.  They  do  go. 
Q.  Has  not  the  farmer  suffered  somewhat  from  that  tendency? 
Well,  as  I  said  before,  the  improved  machinery  for  working 
te  farms  has  measurably  compensated  for  the  loss  of  the  boys; 
we  have  much  of  a  boy  he  don't  stay  there. 
Q.  There  is  not  that  working  together  on  the  farm  to-day  on 
part  of  the  family  that  used  to  be  years  ago?    A.  Not  with 
American  born  citizen. 

Q.  The  farm  is  getting  a  little  too  slow  for  them  ?    A.  The  f arm 
all  right,  but  the  products  don't  bring  much. 
Q.  My  opinion  was  that  by  reason  of  that  tendency  of  the  boy 
leave  the  farm  and  go  to  the  business  centers  that  the  farmers 
fered  by  being  compelled  to  hire  labor  in  his  stead;   what  is 
opinion  as  to  that?    A.  You  are  correct  in  that  view  of  it> 
ly  as  this  deficiency  is  corrected  by  more  improved  machinery. 

By  Mr.  Guenther. 

Q.  Does  that  improved  machinery  cost  so  much  that  it  takes 
much  of  the  farm's  earnings,  and  the  continual  repairing  of  it? 
Yes,  sir;  it  is  one  of  the  items  of  expense,  and  a  very  import- 
one,  but  we  are  getting  machinery  cheaper  as  the  years  go 
ind. 

39 


306 

Q.  Is  it  not  a  fact  that  the  reasons  enumerated  by  the  Senator 
that  as  to  the  son  goingj  away  and  the  fact  of  western  competi- 
tion have  more  to  do  with  the  depreciation  of  the  farm  property 
than  the  tax  levied  by  the  State  upon  them?  A.  That  may  be  in 
individual  cases. 


i 


By  the  Chairman. 

Q.  You  think  that  the  present  condition  of  the  farmer  is  attri- 
butable to  the  fact  that  he  has  been  compelled  to  contribute 
towards  the  support  of  the  State  government?  A.  No,  sir;  not 
to  any  great  extent. 

Q.  Suppose  that  for  the  past  twenty-five  years  a  farmer  had 
not  been  called  upon  to  contribute  anything  to  the  general  State 
government  that  there  would  have  been  any  perceptible  chang 
in  his  financial  situation  to-day  for  the  better?    A.  I  don't 
why  it  should  not  have  had  the  same  result  as  it  would  by  th 
increase  of  an  income  from  any  other  source  to  that  extent. 

Q.  But  the  average  annual  contribution  of  the  farmer  towarc 
the  support  of  the  State  government  is  so  little  that  I  suppos 
that  he  would  not  at  the  end  of  a  period  of  years  be  very  muc: 
better  off;  that  this  small  amount  he  would  have  contribute 
would  have  been  swallowed  up  by  some  other  means?  A.  It  mi-gh 
have  been  swallowed  up  by  some  other  expense. 

Q.  And  if  he  had  the  aggregate  of  all  he  had  paid  toward 
the  support  of  the  State  government  to-day  it  would  not  reliev 
him  very  much?  A.  It  would  pay  so  much  debts  with  three 
fourths  of  them. 

Q.  You  don't  think  his  present  condition  is  attributable  to  tha 
to  any  extent;  it  is  not  the  burden  of  State  taxes  that  has  pn 
him  where  he  is?  A.  Not  wholly;  but  there  is  just  about  th 
same  principle,  just  about  the  same  principle  that  governs  o 
actuates  the  human  nature  of  a  farmer  as  it  does  with  some  othe 
people. 

Q.  Don't  the  other  people  pay  their  State  taxes?  A.  Certainty 
but  the  Comptroller  says  there  are  two  billions  of  it  don't  pay 
we  know  we  have  two  billions  of  property  in  this  State  whic 


307 

is  Jiable  and  if  you  people  down  there  can  make  it  pay  it  relieves 
our  burden  two-fifths. 

Q.  One  of  the  witnesses  who  preceded  you  testified  that  his 
contribution  towards  the  support  of  the  State  government  was 
about  six  dollars  on  110  acres  of  land?  A.  It  must  have  been 
mighty  poor  land. 

Q.  I  find  that  the  taxation  in  your  town  is  very  low  —  in  1890  — 
in  the  town  of  Ogden;  what  have  you  to  say  about  the  valuation 
of  land;  it  was  valued  at  what?  A.  Seventy  dollars  an  acre. 

Q.  Now,  what  is  the  average  basis  of  valuation  by  your  assessors 
on  the  dollar?  A.  Fully  up  to  eighty  per  cent  —  eighty-five 
perhaps. 

Q.  I  find  that  the  rate  of  taxation  is  not  much  over  one-half  of 
one  per  cent  in  your  town.  A.  No;  we  have  no  complaint  to 
make  about  our  county;  I  think  there  are  but  two  counties  in  the 
State  that  are  lower;  we  have  got  Rochester  in  with  us  too. 

Q.  Do  you  not  consider  that  is  an  exceedingly  low  rate  of 
taxation?  A.  Yes,  sir. 

Q.  Are  you  familiar  to  any  extent  with  the  rate  of  taxation 
paid  in  the  cities  of  the  State?  A.  Only  as  I  have  noticed  it 
from  the  reports;  I  see  the  counties  run  all  along  from  six  dollars 
on  a  thousand  up  to  twenty. 

Q.  You  know  that  in  the  city  of  New  York  the  present  tax 
ratp,  while  it  is  the  lowest  in  a  great  many  years,  is  now  1.85.? 
A.  Yes,  sir. 

Q.  And  in  the  city  of  Brooklyn  3.25;  do  you  not  think  the 
burden  falls  much  heavier  in  cites  than  in  the  country?  A.  I 
don't  know  that  they  pay  any  more  State  tax  than  we  do  on  a 
dollar,  and  if  they  are  paying  eighteen  dollars  on  a  thousand 
that  is  because  they  may  be  considered  very  largely  in  the  nature 
of  assessments  for  their  own  individual  benefits. 

Q.  Do  you  own  any  other  real  estate  than  your  farm?  A.  No, 
sir. 

Q.  How  many  acres  of  land  have  you  got  assessed?  A.  From 
150  to  160,  I  guess 

Q.  Are  you  valued  ^  the  basis  of  eighty  dollars  an  acre,  or 
is  it  an  aggregate  SULN  A.  The  general  r«te  of  the  assessors 


308 

is  to  assess  farms  by  the  acre;  that  is,  they  value  them  by 
acre. 

Q.  How  is  it  in  your  case,  do  you  know  ?    A.  By  the  acre. 

Q.  Do  you  know  what  the  aggregate  valuation  fixed  by 
assessors  is?    A.  Fifteen  thousand  dollars  or  $16,000,  perha] 
something  like  that;  my  farm  lies  in  a  pretty  good  location  ai 
they  put  it  up. 

Q.  Do  you  remember  the  amount  of  taxes  you  paid  last  yeai 
for  all  purposes?  A,  I  think  it  was  a  trifle  over  sixty  dolki: 
last  year;  I  will  be  compelled  to  pay  twenty-five  dollars  nior< 
this  year. 

(>.  According  to  the  table  laid  down  by  tbe  board  of  Stuti 
assessors,  your  contribution  to  the  State  government  last  year 
was  about  twenty-one  dollars;  the  rest  of  your  taxes  was  for  local 
purposes?  A.  A  good  deal  more  than  that;  last  year  was  a 
remarkable  year;  I  hesitate  to  base  any  evidence  in  the  interest 
of  farmers  upon  the  last  year's  statement,  because,  as  you  know, 
the  State  tax  last  year  was  remarkably  low ;  this  year  it  is  about 
$100,000  more  on  Monroe  county. 

Q.  Can  you  recall  what  you  paid  in  1890?  A.  It  was  about 
ninety  dollars. 

Q.  A  difference  of  $100,000  added  to  the  State  tax  of  Monroe 
county  would  not  add  one-third  to  your  taxes?  A.  No,  sir. 

Q.  It  would  not  make  the  difference  between  sixty  dollars  and 
ninety  dollars?  A.  Last  year  it  was  something  over  sixty  dol- 
lars, and  I  think  it  was  a  dollar  or  two  below  ninety  dollars  the 
year  before;  I  have  not  made  any  figures  about  it,  but  I  think 
the  addition  this  year  in  the  State  tax  over  last  year  is  in  the 
neighborhood  of  twenty  per  cent. 

Q.  Now,  my  purpose  for  asking  you  those  pointed  and  personal 
questions  is  with  a  view  of  taking  your  own  case  for  the  prrpose- 
of  ascertaining  what  relief  the  farmer  can  have  provided  all  this 
property  that  you  say  is  escaping  taxation  should  be  actually 
taxed;  now,  on  the  basis  of  the  highest  assessment  that  you 
have  mentioned  that  3rou  paid  your  contribution  to  the  State 
would  be  about  thirty-three  dollars;  now,  what  would  you  favor, 


309 

a  continuation  of  the  tax  upon  real  estate  for  the  purposes  of 
the  general  government  and  assessing  all  this  personal  property 
that  YOU  speak  of,  or  would  you  favor  releasing  real  estate  from 
the  purposes  of  taxation  for  State  government  altogether;  in  the 
one  case  you  would  be  relieved  to  the  extent  of  thirty-three 
dollars  in  your  case,  and  in  the  other  by  taxing  two-fifths  of  the 
personal  property  that  escapes  you  would  be  relieved  to  the 
[extent  of  about  thirteen  dollars;  now,  which  would  you  favor? 
.  You  put  it  as  a  financial  question? 

Q.  Yes,  sir;  which  would  give  you  most  relief;  which  would  you 
|prefer?    A.  I  should   say,  let   the   corporations   pay   the   State 
ses,  provided  the  State  expenses  remain  as  they  are  now; 
tat  is,  with  the  general  expenses  and  schools,  canals,  ttc. 
Q.  Now,  you   did   say   something   about   the   school    question; 
rould  yon  be  in  favor  of  making  that  entirely  a  local  question, 
Ting  the  localities   to  support   schools  and   educate  its   own 
children?    A.  Some  of  the  central  counties,  perhaps,  pay  more 
ian  their  share  of  the  school  tax,  and  the  balance  get  the  advan- 
ige;  in  those  particular  counties  there  might  be  some  advantage 
we  should  pay  all  the  school  expenses,  but  as  a  financial  ques- 
ion,  so  far  as  I  am  concerned,  I  should  say,  if  those  corporations 
II  take  care  of  the  State  expenses  we  will  take  care  of  our 
local  affairs. 

Q.  Including  schools?    A.  Yes,  sir;  I  want  to  qualify  that  in 

ds  way;  I  am  speaking  for  Monroe  county  when  I  say  that;  we 

ire  about  up  and  up  even  on  that  question;  it  would  not  make 

difference  to  us. 
Q.  You  give  about  as  much  as  you  receive?    A.  Yes,  sir;  but 
can  readily  understand  that  there  are  many  counties  in  the 
tte  that  would  make  serious  objections  to  that,  because  they  are 
Diving  more  than  they  are  paying. 

Q.  Getting   something   for   nothing,   in   other  words?    A.  No, 
•;  do  not  get  that  idea;  there  are  a  great  many  expenses  of  New 
rork  city,  for  instance,  as  a  city  of  the  State  of  New  York,  that 
ie  in  as  State  expenses. 


310 

By  Mr.  Guenther. 

Q.  For  instance  what?    A.  I  won't  attempt  to  name  them. 

Q.  They  build  their  own  armories?    A.  Certainly. 

Q.  What   is   there   that   the   State   contributes   towards   Ne 
York  city;  they  maintain  their  own  normal  school;  they  nial 
tain  their  own  public  institutions;  their  asylums  for  the  care 
the  insane;  you  have  State  care  for  those  everywhere  else  bul 
not  in  New  York?    A.  Perhaps  I  was  hasty  in  making  that  si 
gestion,  but  that  was  my  impression. 

Q.  You  said  you  were  in  favor  of  reducing  the  legal  rate  ol 
interest  from  six  to  five  per  cent  and  also  in  favor  of  taxing 
mortgages?    A.  Yes,  sir. 

Q.  In  the  event  of  changing  the  law  —  reducing  the  legal 
rate  of  interest  —  and  in  the  event  of  mortgages  being  taxed, 
who  would  stand  the  burden,  the  borrower  or  the  lender;  oufc 
of  whom  would  that  come  in  your  opinion?  A.  That  would 
be  governed  entirely  by  the  circumstances  of  the  loan;  as  a  gen- 
eral principle,  the  lender  would  have  to  stand  it,  but  the  bor- 
rower has  generally  to  pay  for  the  loan. 

By  Mr.  Hamilton. 

Q.  Is  the  sentiment  of  your  community  in  favor  of  a  listing 
system?  A.  No,  sir;  I  would  like  to  say  a  word  to  you  on  the 
question  of  listing;  now,  it  is  a  most  remarkable  fact  that  the1 
farmers  who  have  a  dollar's  worth  of  personal  estate,  it  is  run- 
ning over  their  place  where  every  assessor  can  see  it,  and  could 
not  possibly  escape  under  the  listing  system,  while  a  man  who 
does  not  own  cattle  and  hogs,  has  got  it  in  his  pocket  out  ol 
sight;  the  experience  has  been  wherever  they  have  adopted  that 
listing  system  that  the  farmers  are  the  ones  that  have  paid,  and 
they  can  not  escape. 

Q.  Is  the  sentiment  of  your  community  in  favor  of  the  con- 
tinuation of  the  allowance  of  personal  indebtedness  as  an  offset 
on  the  tax  on  personal  property?  A.  I  should  have  to  ask  TOUB 
indulgence  to  say  a  word  about  that;  if  you  gentlemen  or  the 
gentlemen  in  Albany  can  tell  me  any  reason  why  personal 


311 

lebtedness  should  be  exempt  for  taxes  any  more  than  indebted- 
on  real  I  would  like  to  hear  it;  I  don't  believe  there  is  any 
advantage  in  the  owner  of  real  property  over  those  that  own 
personal. 

Q.  Then  your  view  is  that  the  sentiment  of  the  community 
is  opposed  to  the  continuation  of  that  exemption?  A.  We  are 
in  favor  of  the  exemption  for  indebtedness  on  real  property  if 
it  can  be  done,  but  I  can  readily  understand  that  under  the 
present  system  of  assessment  it  coul$  not  be  done. 

Q.  You  believe  that  if  allowed  on  one  it  should  be  on  the  other, 
or  not  allowed  on  any?  A.  Yes,  sir;  that  is  one  of  the  points  on 
which  we  fanners  ask  to  be  placed  on  a  fair  basis  with  the  other 
business  interests  of  the  State  of  New  York;  we  do  not  feel 
that  under  the  information  we  get  and  the  reports  that  come  to 
us  officially  that  we  are  on  a  fair  and  equitable  basis  as  regards 
this  question  of  taxation;  we  simply  want  to  be  put  there,  and 
anyway  you  people  can  do  it  will  be  satisfactory  to  the  farmers; 
there  will  be  no  cause  of  complaint;  and  this  old  question  com.es 
up  when  you  say  the  State  tax  is  a  very  small  matter;  that  prin- 
ciple holds  good  when  this  other  fellow  escapes  and  we  pay,  and 
we  are  very  liable  to  sit  on  the  fence  and  speak  of  it. 

By  the  Chairman. 

Q.  Does  not  the  farmer  lose  more  by  giving  his  time  to  the 
agitation  of  this  question  and  discussing  it  than  the  amount  of 
tax  that  he  has  to  pay?  A.  I  admit  it,  sitting  on  salt  barrels. 

Arvin  Rice,  called  as  witness,  being  duly  sworn,  testified  as 
follows : 

By  Mr.  Hamilton. 

Q.  Whore  do  you  reside?    A.  Fulton,  Oswego  county,  New  York. 

Q.  And  your  business?     A.  I  am  a  lawyer. 

Q.  Are  you  also  connected  with  the  savings  banks?  A.  I  am, 
willi  the  Fulton  Savings  Bank. 

Q.  How  long  have  you  been  so  connected?    A.  Ten  years. 

Q.  In  what  capacity?  A.  I  have  been  a  director  for  that  time 
and  vice-president. 


312 

Q.  Have  you  read  the  resolution  under  which,  the  committee 
now  acting?    A.  Yes,  sir. 

Q.  Have  you  at  any  time  held  public  office  where  the  questic 
of  taxation  was  drawn  to  your  attention?  A.  I  was  supervis 
in  our  county  for  several  terms. 

Q.  What  have  you  to  say  as  to  the  propriety  of  modifying  tl 
present  laws  relating  to  taxation,  assessment  and  interest  so  fa< 
as  they  affect  the  agricultural  and  other  interests  of  the  state? 
I  speak  mostly  from  my  own  knowledge  and  opinion  formed,  as 
have  been  in  business  and  done  public  business,   more  than 
do  fvoir  the  opinion  of  others  perhaps;  my  own  opinion  is  that 
personal  property  is  not  taxed  to  any  amount  in  our  vicinity; 
national  banks,  the  stockholders  pay  larger  than  any  other  kind 
of  personal  property,  that  is  the  bulk  of  personal  property  in  our 
county  that  pays  tax. 

Q.  What  is  the  cause  that  produces  this  result  of  the  escape 
of  taxation  on  personal  property?  A.  It  is  largely  due  perhaps 
to  the  inefficiency  or  inexperience  of  the  assessors,  and  the  ten- 
dency of  people  to  shirk  it;  if  the  assessors  put  it  on  a  man  he 
will  come  in  and  swear  it  off. 

Q.  AT  hat  remedy  can  you  suggest  to  avoid  that  difficulty?  A. 
I  do  not  know  of  any  remedy;  I  can  not  think  of  any  law  that 
would  make  a  man  swear  to  the  truth. 

Q.  Does  no  remedy  suggest  itself  to  you  whereby  the  extent  of 
personal  property  could  be  ascertained  without  the  necessity 
of  ivMng  solely  upon  the  oath  of  the  party  interested?  A.  I  have 
not  thought  of  any. 

Q.  In  regard  to  the  question  of  taxation  of  mortgages,  what  have 
you  to  say?  A.  This  question  of  whether  the  owner  of  the  land 
and  the  owner  of  the  mortgage  should  both  pay? 

Q.  Yes,  sir.     A.  Well,  the  general  opinion  of  peopL?.  especi 
those  that  owe  the  mortgage,  is  that  it  is  unjust,  and  that  : 
there  is  an  exemption  for  taxation  on  personal  property  becai 
a  man  owes  debts  it  should  be  on  real  estate  also. 

Q.  And  that  feeling  grows  out  of  the  fact  that  personal  indebted- 
ness is  allowed  as  an  offset?  A.  Yes,  sir. 


313 


Q.  And  if  it  were  equalized  by  applying  the  same  rule  to 
both,  cither  have  no  exemption  or  both  exempt,  that  evil  would  be 
corrected?  A.  I  do  not  think  that  would  satisfy  the  people  who 
b\ve  the  debts;  it  would  satisfy  the  lenders  but  not  the  borrowers. 

Q.  "Would  not  that  relieve  estate  very  largely?    A.   I   don't 
;hink  so,  I  do  not  think  that  would  be  the  result. 
Q  "Would  it  not  have  that  result  if  that  amount  were  deducted? 
That  might  relieve  real  estate  some;  yes,  sir. 
.   On  the  other  hand,  if  there  were  no  exemption  allowed, 
T  personal  debts,  would  it  not  so  increase  the  tax  rates  as 
lereby  to  decrease  the  taxation  on  real  estate?    A.  You  can  not 

personal  property  except  one  or  two  classes  in  our  vicinity. 
Q.  What  classes  are  they?    A.  That  is  the  national  banks. 
Q.  What  other  class?    A.  You  can  get  visible  personal  property 
stocks  of  goods  and  things  of  that  kind;  the  merchants  in 
mr  town  are  assessed  as  personal  property  on  their  stock. 
Q.  Is  the  sentiment  of  your  community  in  favor  of  the  listing 
rstem?     A.  No,  sir;  I  do  not  think  so. 

Q.  And  still  no  remedy  suggests  itself  to  you  by  which  that 
can  be  corrected?  A.  I  don't  know  of  any  way;  I  can  not 
k  of  any  way;  you  never  can  get  personal  property  and  make  it 
id  its  proportion  or  share;  I  am  personally  of  the  opinion  that 
had  better  leave  it  off  entirely  and  tax  the  real  estate  that 
can  see. 

Q.  In  your  experience  with  savings  banks  what  have  you  to 
ty  as  to  the  present  rate  of  interest  in  this  State?  A.  I  hardly 
ik  the  tune  has  come  yet  for  reducing  it;  of  course,  if  the 
igs  run  for  the  next  few  years  as  they  have  for  the  last  three 
four  it  will  come  to  be  reduced  to  five  per  cent. 
Q.  The  law  of  demand  and  supply  will  of  itself  cause  the  reduc- 
?  A.  Yes,  sir;  I  have  a  personal  view  about  that  too;  my 
would  be  to  make  a  rate  that  you  can  not  go  beyond,  and  let 
tern  fix  the  rate  by  agreement,  say  ten  per  cent;  that  should  be 
.e  legal  limit,  and  let  them  agree  upon  the  terms  according 
the  security  they  can  give. 
40 


.mie 
id  a 

r  in 
ft?r 


314 

Q.  What  is  your  experience  in  regard  to  the  interest  that  is  paid 
upon  mortgages  on  real  estate  in  your  locality?  A.  All  small 
mortgages  pay  six  per  cent;  a  mortgage  of  f  5,000  and  upwards  can 
be  placed  at  five. 

Q.  Any  lower  than  five?    A.  I  do  not  know  of  any;  I  presume 
if  a  man  wanted  $40,000  or  $50,000  he  could  get  it  at  four  an< 
half. 

Q.  Explain  what  it  is  that  holds  the  rate  of  interest  higher 
the  case  of  small  loans?    A.  It  is  the  trouble  of  looking  aft?] 
them  and  taking  care  of  them;  it  is  just  as  much  trouble  for  a 
man  to  have  a  $500  mortgage  as  a  $5,000  mortgage,  and  a  $5,0<M) 
mortgage  would  be  liable  or  probable  to  run  a  greater  length  of 
time  and  to  be  a  permanent  investment;  a  large  mortgage  would 
probably  have  the  interest  paid  promptly  and  regularly,  while 
a  farmer  with  a  small  loan  on  his  farm  is  apt  to  be  from  a  mont] 
to  three  months  behind,  complaining  of  his  crop;  that  he  has  no 
cut  his  tobacco  yet,  etc. 

Q.  Js  your  community  a  large  farming  community?  A.  Yes 
sir. 

Q.  Have  you  had  much  experience  with  them  in  that  connec 
tion?  A.  Yes,  sir;  farmers  have  had  very  hard  times  for  the  las 
three  years;  farms,  I  think,  decreased  during  the  last  six  yean 
fifty  per  cent. 

Q.  Is  that  depreciation  in  any  way  attributable  to  the  tas 
laws  of  the  State?  A.  I  do  not  think  so. 

Q.  To  what  is  that  attributable  then  in  your  judgment?  A.1 
is  the  same  as  it  is  in  the  eastern  States;  the  west  has  furnisher 
cheap  land  and  large  crops,  and  we  can  not  produce  grain 
wheat,  oats  or  corn  or  beef  here  to  compete  with  them;  there  i 
no  market;  seventy-five  cents  a  bushel  for  wheat;  farmers  can  no 
raise  it. 

Q.  That  evil  is  beyond  remedy  by  legislation?  A.  I  do  no 
think  legislation  can  help  that. 

Q.  In  regard  to  the  question  of  the  equalization  of  taxes  betwciei 
the  various  counties,  what  have  you  to  say?  A.  I  have  devote 


315 

[more  attention  to  that,  perhaps,  while  I  was  supervisor  than  any 
;t>ther  part  of  the  taxation;  my  judgment  is  it  will  always  be  a 
ground  of  complaint  as  long  as  we  have  to  do  it. 

Q.  Then  your  judgment  is  that  some  means  should  be  devised 
that  would  avoid  the  necessity  of  raising  in  different  localities 
any  tax  for  State  purposes?  A.  Yes,  sir;  our  county  would  be 
'pleased  to  have  the  State  tax  taken  care  of  in  some  other  way. 

Q.  In  the  event  of  that  result  being  reached,  what  is  the  senti- 
ruent  of  your  community  as  regards  the  local  option  tax  law?  A. 
That  has  not  been  discussed  and  was  not  at  the  time  I  was  with 
fehe  public  officers. 

Q.  Based  upon  your  experience,  what  have  been  your  views  in 
^regard  to  it?  A.  I  think  the  feeling  is  they  would  like  to  try  it. 
i  Q.  What  is  the  sentiment  of  your  community  in  regard  to 
;he  succession  or  inheritance  tax?  A.  Bather  unfavorable;  the 
people  are  not  used  to  it,  and  when  you  come  to  a  tax  on  direct 
succession  they  are  inclined  to  grumble  about  it;  the  law  is 
;jincertain  yet;  there  are  different  constructions  placed  upon  it, 
ind  they  do  not  understand  how  it  is  going  to  hit. 

Q.  That  is  the  reference  to  the  law  of  1892?  A.  Yes,  sir. 
!  Q.  Do  you  know  of  any  instance  where  the  cpaital  has  been  or 
is  driven  from  the  State  by  reason  of  the  restrictions  affecting 
corporations?  A.  No,  sir;  I  do  not  know  as  I  do;  there  has  quite 
a  good  deal  of  capital  gone  from,  our  vicinity  to  western  States  to 
be  invested. 

Q.  Owing  to  the  higher  rate  of  interest?  A.  Yes,  sir;  and 
getting  rid  of  their  personal  property  taxation;  they  hide  it  that 
way. 

Q.  But  as  peculiarly  applicable  to  corporations  you  know  of  no 
(instance?  A.  No,  sir. 

Q.  What  have  you  to  say  as  to  a  change  or  modification  in  the 
existing  laws  for  the  increasing  of  the  direct  revenues  of  the 
State  government?  A.  I  don't  know  in  what  particular  line  the 
tax  should  be  increased. 

Q.  The  suggestion  which  has  been  frequently  made  by  the 
Comptroller  of  the  State;  tax  corporate  indebtedness  which  would 


316 

bring  some  $2,000,000,000  within  the  range  of  taxation  by  th.e| 
State  laying  a  light,  specific  tax?  A.  I  think  that  the  people 
rather  favor  something  of  that  kind;  my  own  idea  had  been  tlu.t 
perhaps  some  sort  of  income  tax,  or  something  of  that  kind,  could 
be  made. 

Q.  Is  the  sentiment  of  your  community  favorable  to  an  incoi 
tax?    A.  Perhaps  not;   but  my  own  thought  on  the  subject  ha< 
been  it  was  a  very  fine  way  to  get  revenue;  small  incomes  no 
and  as  they  grow  larger,  tax  them  heavier. 

Q.  Have  you  considered  the  question  of  taxing  savings  bank 
deposits?  A.  Yes,  sir. 

Q.  In  your  experience  in  connection  with  such  banks  what  Is 
your  opinion  in  regard  to  that  question?  A.  I  think  it  would 
injure  the  banks,  and  I  do  not  think  it  would  produce  such  revenue. 

Q.  In  what  way  would  it  injure  the  banks?  A.  People  would 
put  their  money  in  some  other  way  and  would  withdraw  it  from 
the  banks. 

Q.  You  think  it  would  tend  to  decrease  the  habit  of  savings 
on  the  part  of  the  people?  A.  I  do. 

By  Mr.  Guenther. 

Q.  For  whose  benefit  is  the  surplus  held  in  a  savings  bank? 
A.  For  the  benefit  of  the  depositors,  I  suppose. 

Q.  Bo  you  know  of  any  case  where  the  depositors  ever  received 
any  benefit  from  it?  A.  I  never  heard  of  such  a  thing. 

By  Mr.  Hamilton. 

Q.  What  disposition,  if  any,  is  made  of  the  surplus?  A.  It  is 
simply  kept  invested  by  the  bank  as  far  as  I  know. 

Q.  And  the  only  use  to  which  it  is  put  is  on  addition  secui 
for  the  depositors?    A.  Yes>  sir. 

By  the  Chairman. 

Q.  Is  not  that  the  best  possible  use  to  which  it  can  be  pul 
A.  I  suppose  so,  perhaps. 


317 

Q.  Suppose  I  make  a  deposit  in  the  pulton  bank;  I  know  when 
it  in  that  bank  I  am  to  get  three  and  one-half  or  four  per 
and  that  the  bank  will  not  hold  out  that  it  will  pay  any 
re;   well,  my  money  remains  invested  in  your  bank  and  I  get 
ee  and  one^half  per  cent;   when  I  get  ready  I  draw  it  out;   I 
,ve  got  all  that  I  am  entitled  to,  have  I  not?    A.  If  the  money 

earned  more  perhaps  you  are  entitled  to  more. 
Q.  The  bank  does  not  agree  to  pay  any  more?    A.  As  I  under- 

d  the  law  the  bank  can  not  agree  to  pay  anything. 
Q.  It  is  well  understood  that  the  banks  are  paying  so  much 
terest  on  deposits?    A.  As  I  understand  it  unless  they  earned 
they  could  not  divide  four  per  cent. 

Q.  Do  you  hold  then,  that  they  have  got  to  divide  all  they 
ve  got?    A.  No,  sir;  I  do  not  think  the  law  says  so,  but  I  think 
y  can  not  exceed  what  they  do  get;   they  are  not  obliged  to 
de  it  all. 

Q.  If  the  depositor  gets  his  interest  semi-annually  what  prop- 
y  interest  has  he  got  in  those  surplus  earnings  beyond  the 
urity  that  it  gives  for  his  deposit?  A.  It  is  his  money  that 
ps  to  earn  it. 

.  The  same  as  parties  forming  a  partnership?  A.  Yes,  sir; 
is  his  money  that  has  earned  the  surplus  and  he  is  more  entitled 
it  than  anybody  else;  that  is  all. 

Q.  He  gets  interest  for  the  use  of  his  money,  and  his  money 

n  safe  keeping  for  the  time  being;  he  does  not  do  anything 

ards  running  the  institution  except  making  his  deposit  for 

own  especial  benefit?    A.  There  is  no  one  else  more  entitled 

it  than  he  is,  or  as  much;  there  is  no  bargain  when  he  puts 

in  that  he  shall  be  satisfied  with  four  per  cent,  as  when  I  put 

mortgage  on  my  house. 

Q.  But  the  institution  itself  must  be  run;  its  operating  expenses 
.ust  be  met;  there  is  not  any  agreement  with  him  that  he  shall 
tribute  to  those;  at  the  same  time  they  must  come  out  of  the 
of  those  deposits;  now,  why  do  not  the  surplus  earnings 
to  the  bank?    A.  There  is  nobody  represents  the  bank 
the  people  of  the  State  of  New  York. 


318 

Q.  It  has  a  board  of  .trustees?  A.  They  have  no  property 
in  it;  they  put  no  money  in  it. 

Q.  But  it  is  an  institution?    A.  Yes,  sir. 

Q.  They  are  authorized  to  do  business  created  under  the  law* 
of  the  State  of  New  York,  and  authorized  to  hold  property' 
A.  Yes,  sir;  as  a  bank;  but  supposing  the  bank  was  to  go  out  ol 
existence  they  could  get  no  money  out  of  it;  there  would  to 
nothing  for  the  trustees  to  divide  among  themselves. 

Q.  I  suppose  the  bank  did  go  out  of  business  and  had  a  surplus 
do  you  think  it  would  be  an  equitable  thing  to  distribute  the 
existing  surplus  among  the  then  depositors?  A.  I  do  not  thinl 
it  would  be  equitable,  but  it  might  have  to  be  done. 

By  Mr.  Guenther. 

Q.  Why  would  it  not  be  equitable?  A.  Because  every  mai 
who  had  even  been  a  depositor  had  helped  to  earn  it. 

Q.  Take  the  other  side  of  the  question;  if  a  man  deposits  hii 
money  in  the  savings  bank,  as  we  have  had  a  case  in  Buffalo,  rii 
bank  fails  and  he  loses  fifty  per  cent  of  the  amount  deposited 
why  should  he  not  be  entitled  to  half  the  surplus  if  he  is  liabl< 
to  lose  half  of  his  deposit?  A.  I  think  the  surplus  belongs  ti 
the  parties  whose  money  earned  it,  but  how  they  can  arrange  i 
under  any  law  to  get  a  cent  what  would  be  equitable  I  can  not  set 

By  Mr.  Hamilton. 

Q.  Have  you  any  other  suggestion  to  make  to  the  committe 
touching  this  question  of  taxation  to  which  your  attention  ha 
been  called?  A.  There  is  one  thing  about  taxing  deposits;  som; 
suggestions  have  been  made  some  time  about  not  taxing  thj 
small  depositors,  but  taxing  the  large  depositors  in  a  bank; 
can  not  see  how  that  could  be  done,  because  the  large  depositor  j 
would  divide  it  up  among  their  families  and  put  it  in  othe 
banks,  and  it  could  not  be  reached. 

By  the  Chairman. 

Q.  Your  opinion  about  it  would  be  that  if  personal  propem 
is  to  be  taxed  at  all,  that  it  ought  to  be  all  taxed?  A.  Yes,  sill 
but  I  do  not  know  of  any  way  under  Heaven  you  can  do  it. 


319 

Q.  You  would  not  say  because  a  man  has  only  $500  he  ought 
»  escape  and  that  a  man  who  has  got  $100,000  ought  to  be  taxed? 
A.  No;  and  still  there  are  a  great  many  depositors  in  the  savings 
>anks  that  scrape  together  a  little  and  ought  to  be  encouraged 
n  getting  small  deposits,  as  a  matter  of  public  good;  habits  of 
;hrift  and  industry  to  get  together  a  little  ought  to  be  encouraged; 
when  a  man  has  got  $3,000  he  has  got  his  habits  established  and 
ought  to  begin  to  pay  taxes. 

Q.  You  ought  to  punish  him  because  he  has  succeeded  in 
securing  the  sum;  because  he  has  been  more  thrifty  than  his 
neighbor  he  ought  to  be  punished  by  a  tax?  A.  I  do  not  know 
ihat  I  would  call  it  "punish." 

By  Mr.  Hamilton. 

Q.  Should  any  personal  property  of  any  kind  escape  taxation 
n  this  republican  form  of  p;overnment  of  the  people?  A.  Not 
as  an  abstract  question;  as  a  theory;  as  a  practical  question  there 
should. 

Q.  Is  there  anything  in  the  present  law  which  exempts  a  sav- 

pngs  bank  depositor  any  more  than  another  bank  or  any  other  form 

bf  asset  for  paying  taxes?    A.  I  am  not  able  to  say  just  how 

the  law  reads,  but  there  'is1  a  section  that  says  something  about 

^deposits  of  savings  banks. 

Q.  It  does  not  say  that  they  are  exempt  from  taxation?    A. 

It  is  claimed  by  officers  of  some  banks  that  it  does;  my  theory 

i&bont  taxation  is  that  after  the  thing  gets  adjusted  and  running 

lit  makes  no  difference  what  particular  property  is  taxed;  it  will 

be  spread  amongst  the  community  and  the  whole  people  and  adjust 

itself;  for  instance,  if  the  whole  tax  were  placed  upon  dry  goods 

merchants  they  would  spread  it  upon  the  community  that  dealt 

with  tli em  and  in  the  end  it  would  average  itself;  it  might  be  a 

•ong  time. 

l*y  Mr.  Stranahan. 

Q.  You  have  seen  the  resolution  of  the  board  of  supervisors  of 

ego  county  passed  yesterday?    A.  Yes,  sir. 
(}.  What  do  you  think  of  the  suggestions  contained  in  that 
resolution?    A.  In  regard  to  the  question  of  State  taxes,  I  think 


320 

favorably  of  it,   letting   the   counties   determine   for   themselves 
about  the  balance  of  the  taxes. 

Q.  You  think  favorably  of  that  part?    A.  Yes,  sir. 

The  resolution  referred  to  is  as  follows : 

"Whereas,  There  is  now  in  session  a  joint  committee  of 
Legislature  of  this  State  investigating  the  operations  of  the 
laws  with  a  view  of  reporting  to  the  Legislature  such  change 
as  are  necessary  in  said  laws,  and 

'*  Whereas,  In  the  judgment  of  this  board  the  present  laws  upon 
the  subject  are  inequitable  in  their  operation,  therefore  • 

"  Resolved,  That  we  urge  said  committee  to  report  some  plan  of 
raising  the  tax  for  the  purposes  of  state  government  from  a  tax' 
upon  the  bonded  indebtedness  of  corporations  and  on  inheritances 
and  thus  entirely  relieve  the  counties  of  the  State  as  such  fro'ii 
raising  any  money  for  State  purposes,  and 

"Resolved,  That  inasmuch  as  there  seems  to  be  irreconcilable 
differences  between  the  counties  of  the  State  as  to  the  wisdom  ofj 
taxing  personal  property  that  we  favor  the  passage  of  a  law  giving 
the  local  authorities  power  to  determine  the  manner  of  raising^ 
the  money  for  the  purposes  of  the  government  of  each  county. 

"Resolved,  That  the  clerk  of  this  board  be  authorized  tiudj 
directed  to  deliver  a  certified  copy  of  this  resolution  to  said] 
committee. 

u  This  is  to  certify  that  the  above  is  a  true  copy  of  a  resolution 
as  passed  by  the  board  of  supervisors  of  Oswego  county,  December 

28,  1802. 

"W.E.LEWIS,  Clerk." 

Q.  You  say  if  you  place  a  tax  upon  one  line  of  business  they 
would  raise  the  price  of  what  they  sold,  and  would  in  that  way 
receive  the  money  back  again  after  they  paid  it?  A.  That  would 
be  the  result  in  the  end. 

Q.  If  you  place  all  the  tax  upon  the  real  estate  how  are  the< 
owners  of  real  estate,  if  fanners,  going  to  raise  the  price  so  as 
to  get  it  back  from  their  consumers;  how  are  they  to  get  the 
advanced  value  of  their  products,  because  they  do  aot  make  the 


marker?  A.  Perhaps  in  this  State  our  farmers  having  to  compete 
with  fanners  in  other  States  they  might  be  at  a  disadvantage. 

Q.  You  think  the  farmers  have  the  power  to  raise  the  price 
of  their  products?  A.  Yes,  sir;  it  would  not  be  produced  after 
i awhile;  the  question  of  supply  and  demand  fixes  the  price  of 
whvat. 

Q.  What  do  you  say  about  the  present  method  of  taxing  collat- 
ieral  and  direct  inheritances;  do  you  consider  the  policy  a  wise  one? 
A.  To  tax  inheritances? 

Q.  Yes,  sir.    A.  Yes,  sir;  I  do,  personally. 

Q.  \Vhat  have  you  to  say  as  to  the  present  rate  of  iiva  per  cent 
an  collateral  inheritance  and  one  per  cent  on  direct?  A.  I.  do  not 
;hink  it  is  excessive. 

Q.  Would  you  increase  it  in  either  one?  A.  I  would  not  until 
the  thing  got  adjusted,  and  I  knew  what  was  coining;  there  is 
a  great  dispute  now  as  to  what  inheritance  is  taxable;  I  re.id 
;he  law  that  unless  a  man  inherits  f  10,000,  he  pays  no  tax,  and 
the  State  officer  comes  and  says  if  a  man's  estate  is  fl(>,000  and 
le  has  got  ten  children,  it  is  taxed. 

By  Mr.  Stranahan. 

Q.  The  general  term  with  reference  to  the  collateral  inheritance 
;tax  have  decided  both  ways,  I  understand?    A.  Yes,  sir;  it  has 
been  held  in  our  county,  under  an  old  law,  that  unless  they  got 
$500  each  there  is  no  tax. 

By  the  Chairman. 

Q.  Leaving  the  amount  of  the  legacy  out  of  consideration, 
what  do  you  say  as  to  the  rate  one  per  cent  on  direct  inheritance? 
A.  I  don't  think  that  is  excessive.  . 

Q.  Direct  personal   inheritance?    A.  I   don't   think   that  is 
excessive. 

Q.  What  would  you   say   about  increasing   it?    A.  I   should 
want  to  look  over  the  question  as  to  the  necessity  of  paying  it 
iu  order  to  avoid  some  other  form  of  taxation  that  I  did  not  want 
to  go  into,  or  something  of-  that  kind. 
41 


322 

Q.  Suppose  that  the  legislature  should  determine  to  relieve  real 
estate  from  taxation  for  general  State  purposes,  we  would  have 
to  look  for  some  other  sources  of  revenue  to  make  np  for  the 
loss  that  would  be  sustained  by  relieving  real  estate;  now,  would 
you  faATor,  in  that  event,  increasing  the  rate  of  taxation  upon 
direct  inheritance?  A.  That  is  just  the  point;  if  I  did  not  find 
any  other  place  that  I  could  place  it  as  well,  I  would. 

<^.  Is  there  any  other  that  occurs  to  you?  A.  There  is  nothing 
that  occurs  to  me  except  some  form  of  taxation  of  corporations 
or  their  indebtednes,  or  something  of  that  kind. 

Q.  Do  you  think  that  a  tax  of  two  and  n.  half  per  cent  on 
legacies  to  each  individual  of  over  $10,000  wo  aid  be  in  any  man- 
ner oppressive?  A.  None  below  that  to  be  taxed?  f 

Q.  I  say,  a  tax  of  two  and  a  half  per  cent  on  inheritances  above 
$10,000  to  the  individuals?  A.  I  don't  think  that  would  be  a 
hardship,  but  I  should  not  want  to  fix  that  rate  until  I  had 
studied  the  question  in  regard  to  those  other  matters;  I  don't 
feel  competent  to  give  an  opinion  on  that. 

Ey  Mr.  Stranahan.  I 

Q.  Don't  you  think  that  a  tax  on  the  bonded  indebtedness  of 
corporations  of  whatever  may  be  necessary  within  reasonable 
limits,  say  one  per  cent  or  two  per  cent  or  one-half  one  per  cent 
would  fall  as  lightly  as  any  other  form  of  personal  taxes;  would! 
fall,  in  other  words,  upon  individuals  who  would  be  as  well  able  I 
to  pay  a  portion  of  taxation  as  any  other  part  of  the  community? 
A.  The  corporation  owing  the  bond  would  pay  this  tax,  or  would 
they  take  it  out  of  the  interest? 

Q.  They  would  take  it  out  of  the  interest,  I  suppose?  A.  I 
should  think  it  would  be  much  more  satisfactory  to  the  people 
at  large  than  it  would  be  to  increase  the  inheritance  tax' 
considerably. 

Q.  Are  not  those  bonds  as  a  general  thing  in  your  judgment 
held  by  people  who  would  not  feel  it  a  very  great  burden  and 
who  ought  to  bear  some  part  of  the  expenses  of  government?  A.1 
Yes,  sir;  they  are  not  held  but  by  people  who  have  got  several 
thousand  dollars. 

Q.  Lots  of  moneys?    A.  Yes,  sir. 


Oscar  H.  Hale,  called  as  a  witness^  being  duly  sworn  testified 
as  follows: 

By  Mr.  Hamilton. 

Q.  Where  do  you  reside?    A.  Norfolk,   St.   Lawrence  county. 
Q.  Your  post-office  address?    A.  North.  Stockholm. 

Q.  What  is  your  business?    A.  Farmer  at  present. 
Q.  How  long  have  you  been  engaged  in  that  pursuit?    A.  For 
the  last  twenty  or  twenty-five  years. 

Q.  Have  you  followed  any  other  business?  A.  Not  in  that 
time. 

Q.  Have  you  been  connected  with  public  office  in  any  capacity 
iiat  brings  you  in  connection  with  taxation?  A.  I  have  been 

member  of  the  bo'ard  of  supervisors  for  the  last  seven  years. 

Q.  Have  you  had  the  question  of  taxation  under  consideration? 
A.  Yes,  sir;  quite  largely;  so  far  as  it  related  to  our  own  county. 

Q.  You  are  chairman  of  the  committee  on  equalization?  A. 
Yes,  sir;  I  was  last  year;  this  year  I  am  a  member  of  the 
committee. 

Q.  What  have  you  to  say  as  to  the  propriety  of  modifying  the 
wesent  laws  relating  to  taxation,  interest  and  assessment  so  far 
sts  they  affect  the  agricultural  and  other  interests  of  the  State? 
In  my  opinion  the  law  should  be  modified  so  that  more  of  the 
property  of  the  country  can  be  reached  for  the  purposes  of 
;axation. 

Q.  What  property  do  you  refer  to?    A.  Personal  property. 

Q.  Is  it  your  experience  in  your  county  that  personal  property 
"enerally  escapes  taxation?  A.  Quite  largely. 

Q.  Does  it  do  so  by  reason  of  the  evasion  of  the  law  or  the 
axity  of  the  administration  by  the  officials?  A.  Well,  it  is 
jairtially  both;  as  Mr.  Rice  just  said,  it  is  a  pretty  hard  matter  to 
nake  a  man  swear  to  the  truth. 

i   Q.  And  it  is  pretty  hard  to  make  some  officials  do  unpopular 
iwjts?    A.  Yes,  sir. 

Q.  What  remedy  have  you  to  suggest  to  cover  those  defects  in 
instance  or  both  ?    A.  It  is  a  difficult  question  to  answer. 


324 

Q.  You  are  unable  to  suggest  any  remedies?  A.  Yes,  sir;  that 
are  really  satisfactory  to  myself;  I  am  frank  to  say  that  I  have 
thought  on  the  subject  for  the  last  six  or  seven  years,  and  I  really 
have  not  reached  any  conclusion  that  is  satisfactory  to  my  ow:a 
mind;  I  know  what  ought  to  be  done,  but  how  to  reach  that  is 
altogether  another  question;  if  we  could  compel  the  assessors  to 
assess  every  dollar  of  personal  property  it  would  be  all  right, 
how  are  you  going  to  do  it? 

Q.  Would  your  judgment  be  in  favor  of  the  adoption  of  wl 
is  known  as  the  listing  system?    A.  Not  altogjether;    it  is  most 
too  inquisitorial  to  suit  me. 

Q.  It  has  worked  well  in  western  States?    A.  It  has  worked 
well  in  Pennsylvania  and  in  Ohio,  and  I  should  be  glad  to  see  it; 
tried  here,  but  I  say  I  think  it  is  prying  into  a  man's  individual 
affairs  too  much,  a  little  more  than  I  would  like  to  have  them 
pry  into  mine. 

Q.  What  is  the  sentiment  of  your  community  in  regard  to  the 
question  of  taxation  of  mortgages?  A.  They  should  be  taxed;  I 
thing  that  is  the  general  sentiment;  that  they  should  be  taxed; 
the  holder  of  the  mortgage  should  pay  taxes  upon  his  mortgage. 

Q.  What  is  the  sentiment  in  regard  to  the  present  rate  of 
interest  as  affecting  the  agricultural  interests?  A.  The  impres- 
sion generally  is  in  our  section  that  a  lower  rate  of  interest 
ought  to  exist. 

Q.  What  is  the  occasion  for  the  demand  for  that  lower  rate  of 
interest  in  that  community?  A.  Because  real  estate  is  not  pay- 
ing to-day  to  exceed  four  per  cent  interest  upon  its  assessed 
valuation. 

Q.  Net  or  gross?  A.  Net;  much  of  it  is  not  paying  that;  I 
am  speaking  of  well  managed  farms. 

Q.  Are  the  average  farms  in  St.  Lawrence  county  paying  four 
per  cent?  A.  No,  sir. 

Q.  What  is  the  average?  A.  Lots  of  them  are  paying  nothing, 
but  much  of  that  is  due  to  the  management,  and  they  are  no* 
entitled  to  any  income;  they  do  not  manage  their  business  in  a 
businesslike  way. 


325 

Q.  Is  it  your  judgment  that  well  managed  farms  in  St.  Law- 
irence  can  be  made  to  produce  four  per  cent?  A.  Yes,  sir;  1 
I  think  with  the  same  business  principles  applied  to  them  as  are 
^applied  to  other  business  they  will  pay  four  per  cent. 

Q.  Net?    A.  Yes,  sir. 

Q.  In  regard  to  the  question  of  allowance  for  deductions  of  per- 
sonal indebtedness,  what  are  your  views  upon  that  question?  A. 
?If  they  are  to  be  allowed  upon  personal  property  they  ought  to  be 
fallowed  upon  realty. 

Q.  If  they  are  not  to  be  allowed  on  realty  they  should  not  be 
fallowed  on  the  other?  A.  Certainly  not;  I  would  make  them 
pqual. 

Q.  Is  it  your  view  that  personal  property  should  be  taxed 
[where  it  is  located  rather  than  at  the  residence  of  the  owner? 
A.  No,  sir;  I  think  it  should  be  taxed  where  the  owner  resides. 
j  Q.  In  the  case  of  manufactories  located  in  towns,  would  you 
lieprive  the  county  towns  of  the  benefit  of  taxing  the  personal 
(property  accumulated  there?  A.  That  is  a  difficult  question  for 
[pie  to  answer;  my  reason  for  making  that  answer  was  this:  We 
pave  very  largely  with  us  and  quite  generally  through  the  State 
[people  who  send  money  largely  west  to  escape  taxation  partially 
|iere,  and  for  the  sake  of  a  high  rate  of  interest;  we  have  a  good 
joiany  of  them;  moneyed  men  ought  not  to  be  allowed  to  sit  down 
'in  our  town  and  pay  nothing  for  the  support  of  our  municipal 
government,  schools,  etc.,  it  seems  to  me. 

i  Q.  That  would  operate  to  the  extent  of  where  capital  was 
! employed  within  the  State?  A.  Yes,  sir. 

i  Q.  Do  you  believe  that  if  a  plan  were  devised  by  which  the 
entire  State  tax  could  be  raised  independent  of  the  counties  that 
jvould  be  advisable?  A.  The  objection  I  see  to  that  is  in  relation 
tao  our  schools. 

Q.  I  am  not  supposing  now  that  there  is  to  be  anything  omitted 
by  the  State  that  is  now  performed  by  it;  I  mean  that  the  State 
Shall  perform  all  the  paternal  duties  it  now  assumes,  and  to  raise 
its  tax,  and  the  State  taxes  as  now  raised  by  counties  to  be 
entirely  abolished;  would  that  be  desirable  to  the  agricultural 
communities?  A.  I  think  it  would. 


326 

Q.  If  such,  a  plan  were  devised,  what  are  your  views  the  a  in 
regard  to  the  adoption  of  the  local  option  tax  law?  A,  There 
would  be  nothing  else  left  for  them  to  do;  the  counties  would  hav<; 
to  provide  their  own  living  entirely  amongst  themselves. 

Q.  I  mean  to  permit  localities  to  determine  upon  what  prop- 
erty they  would  raise  their  local  taxes,  so  that  St.  Lawrence 
county  might  adopt  one  schedule  and  the  neighboring  count;p 
another,  according  to  the  views  of  the  officials?  A.  So  far  as  our 
county  is  concerned,  I  think  we  would  be  ready  to  accept  it;  it 
might  make  a  general  commotion  throughout  the  State;  I  don't 
know. 

Q.  You  think  you  could  manage  your  affairs  that  way?  A.  We 
should  try.  I 

By  the  Chairman. 

Q.  Would  not  that  commotion  be  confined  within  the  limits 
of  the  county?  A.  I  think  it  would,  quite  generally. 

Q.  What  is  the  sentiment  of  your  community  in  regard  to  the 
inheritance  tax  as  to  whether  the  present  law  is  sufficient,  or 
whether  an  increased  tax  for  State  purposes  should  be  had?  A. 
Generally,  they  think  it  is  large  enough. 

Q.  What  is  the  sentiment  as  to  what  is  known  as  a  graded 
tax  —  raising  the  tax  as  the  amount  of  the  inheritance  increases? 
A.  That  should  be  done  in  my  opinion,  and  it  is  quite  generally 
the  opinion  of  the  leading  men. 

Q.  What  is  the  sentiment  of  your  community  in  regard  to  the 
question  of  taxing  not  only  personal  estate  in  direct  inheritances, 
but  also  the  real  estate?  A.  Not  in  favor  of  taxing  real  estate. 

Q.  Can  you  give  the  reason  upon  which  they  base  the  dis- 
tinction? A.  No;  I  can  not. 

Q.  Is  it  not  generally  based  upon  the  idea  that  personal 
estates  escape  their  just  share  of  taxation  during  the  life  of  the 
possessor  and  thereafter,  the  first  opportunity  that  presents  itself 
they  try  to  get  even?  A.  That  is  about  the  result  of  it;  that  is 
about  it. 

Q.  That  cause  ignores  the  true  ground  upon  which  the  inherit- 
ance tax  law  is  composed?  A.  I  do  not  understand. 


327 

Q.  Does  not  that  reason  ignore  the  true  ground  upon  which  the 
i  inheritance  tax  is  imposed?  A.  It  does. 

Q.  The  theory  upon  which  the  inheritance  tax  law  is  imposed 
is  that  there  is  no  natural  riirht  of  inheritance;  that  it  is  entirely 
I  a  creation  of  government  and  is  maintained  by  the  government, 
and  therefore,  since  the  government  creates  and  maintains  that 
Bright,  it  has  the  right  to  take  its  share  for  the  purpose  of  main- 
Itaining  it. 

A.  The  protection  that  th.3  State  exerts  over  personal  property 
[is  a  great  deal  more  than  over  real;  they  claim  that  personal 
| property  should  pay  for  the  protection. 

Q.  Now,  do  you  know  of  any  instances  where  capital  has  been 
[or  is  being  driven  from  the  State  by  reason  of  the  restrictions 
(affecting  corporations  or  the  tax  imposed  upon  them?  A.  No,  sir. 

Q,  What  do  you  say  as  to  new  laws  or  amendments  or  modi- 
fications of  the  existing  laws  to  increase  the  direct  revenues 
of  the  State?  A.  Some  means  should  be  devised  to  reach  more 
ijof  the  property  of  the  State  —  to  reach  the  personal  property. 

Q.  In  New  York  the  witnesses  that  were  called  before  the 
i  (committee,  including  many  large  owners  of  real  estate,  expressed 
the  opinion  that  personal  property  should  be  practically  relieved 
from  taxation;  how  does  thai,  view  compare  with  the  sentiment  of 
your  community?  A.  They  are  not  in  sympathy  with  it. 

Q.  Have  you  any  suggestions  to  make  to  the  committee  to 
which  your  attention  has,  not  been  called  during  the  course  of 
this  examination  in  regard  to  the  question  under  consideration? 
A.  No;  I  have  not. 

Q.  What  is  the  sentiment  of  your  community  in  regard  to 
the  taxing  of  savings  bank  deposits?  A.  Well,  savings  banks 
are  not  taxable  and  should  not  be  taxed;  the  sentiment  is  that 
the  surplus  should  be,  but  the  question  presents  itself  as  to  where 
the  surplus  belongs;  in  equity  the  surplus  belongs  to  the  parties 
•whose  money  helped  to  create  it;  I  should  hold  that  surplus 
whether  it  was  $100  or  $500  should  pay  its  proportion  of  taxa- 
tion; taxation  should  be  equal,  and  whether  it  is  great  or  small 
it  should  bear  its  just  proportion  of  taxation. 


328 

Q.  You  don't  believe  in  the  view  then  that  by  removing  all 
taxes  upon  personal  property  the  amount  of  it  that  would  flow 
into  this  State  for  investment  would  be  so  great  and  the  increase 
of  the  value  of  real  property  would  be  so  great  that  the  object  o:t 
the  reduction  of  taxation  would  be  thereby  accomplished?  A. 
No,  sir;  because  that  money  would  naturally  center  in  the  com- 
mercial centers;  I  don't  know  how  it  would  help  a  purely  agricul- 
tural community  in  the  least. 

Q.  You  believe  it  would  be  to  the  detriment  of  the  agricultural 
part  of  the  State?  A.  I  do;  that  is  my  first  impression;  I  had 
not  thought  of  that  particular  point. 

By  the  Chairman. 

Q.  How  do  you  think  the  reduction  of  the  rate  of  interest 
from  six  per  cent  to  five  per  cent  would  affect  the  farmer  in  obtain- 
ing a  loan?  A.  I  don't  know  as  it  would  help  him  a  particle. 

Q.  On  the  contrary,  do  you  think  it  would  embarrass  him?  A. 
Hardly  that,  either;  I  don't  think  it  would  affect  him  either  way; 
gilt-edged  securities  can  get  all  the  money  they  want  now. 

J>y  Mr.  Guenther. 

Q.  What  about  other  kind  of  securities?    A.  Not  gilt-edged? 
Q.  Yes,  sir.    A.  You  can  not  get  money  any  time  whether  the 
rate  of  interest  is  six  per  cent  or  ten  per  cent. 

IJy  the  Chairman. 

Q.  Do  you  think  that  the  banks,  as  a  rule,  look  upon  farm  mort- 
gages as  gilt-edged,  do  they  seek  for  them?  A.  No,  sir;  they 
do  no  i. 

Q.  The  question  I  asked  had  special  reference  to  loans  and 
farms?  A.  The  banks  do  not  as  a  rule  seek  loans  upon  farms  any- 
where; the  farmer's  loan  almost  invariably  comes  from  private 
individuals. 

Q.  Jn  their  own  community?  A.  Yes,  sir;  in  their  own  com- 
munity —  locally. 

Q.  Somi  of  the  witnesses  who  have  preceded  you  said  that  in 
their  locality  the  savings  banks  held  a  large  proportion  of  the 


329 

A.  That  is  not  time  with  us;  we  have  several  loan 
ife:sociation&  who  loan  money  to  the  farmers,  but,  as  a  rule,  our 
farmers  get  their  money  largely  from  private  individuals. 

Q.  What  is  the  standard  rate  of  interest  being  paid  on  farm 
[mortgages  now?  A.  First-class  and  in  sums  of  $5,000;  it  pays 
iibout  five  per  cent. 

j  Q.  I  mean  average  farm  property  ?  A.  Six  per  cent. 
I  Q.  Do  you  think  that  if  the  legal  rate  of  interest  was  reduced 
•from  six  per  cent  to  five  per  cent  that  the  average  farmer  could 
liilna-in  a  loan  as  readily  at  five  per  cent  as  he  can  now  at  six 
per  cent?  A.  The  way  the  money  is  coming  from  the  west  I  should 
Jay,  yes;  money  is  good  for  nothing  only  as  it  is  invested;  lying 
Idle  it  has  no  value  at  all. 

I  Q.  Do  I  understand  you  to  say  that  you  were  in  favor  of  taxing 
port  gages?  A.  I  should- tax  mortgage;  here  is  a  difficulty  under 
I  he  present  law  and  a  wrong;  when  the  real  estate  and  mortgage 
j  ,re  both  taxed  it  is  an  injustice;  I  am  not  in  favor  of  taxing 
mortgages  and  real  estate  both;  that  should  be  remedied. 
j  Q.  Your  idea  would  be  to  tax  the  holder  of  the  fee  for  the  equity 
jjhat  he  has,  and  then  tax  the  holder  of  the  mortgage  for  the 
jiraount  of  his  loan?  A.  Yes,  sir;  you  then  only  tax  the  mortgage 
Ince  and  each  person  pays  his  just  proportion. 

Q.  Suppose  that  both  of  your  views  were  carried  into  execution 
>y  the  operation  of  law;  that  the  rate  of  interest  is  reduced  from  six 
o  live  per  cent,  and  that  then  in  addition  you  tax  the  mortgage, 
f  vhat  effect  do  you  think  that  would  have  upon  the  farmer  in 
'braining  a  loan,  bearing  in  mind  that  one  per  cent  of  the  earning 
apacity  of  the  mortgage  has  been  taken  away,  and  that  it  is  then 
axed  in  addition,  say  one  per  cent  or  one  and  one-half  per  cent, 
rtiich  cuts  it  down  to  three  and  one-half  or  four  per  cent?  A. 
Tutil  it  adjusted  itself  it  might  be  a  little  more  difficult  for  him 
o  secure  a  loan,  but  in  a  very  short  time,  I  think,  he  could  secure 
#*  loan  as  readily. 

Q.  What  do  you  think  money  ought  to  earn  as  a  fair  result  of 
nvestment?     A.  It  ought  to  earn  five  per  cent. 
Q.  If  your  views  were  carried  out  and  the  rate  of  interest  was 

teed  and  the  mortgage  taxed,  you  can  see  where  the  investor 
• 


« 


3:50 

would  not  receive  any  such  income  as  that  from  his  money?  JL 
That  is  true;  it  would  adjust  itself  very  readily;  really  the  rate  of 
interest  is  controlled  quite  largely  by  supply  and  demand;  as  a  gea- 
tleman  said  here  about  reducing  or  increasing  farmers'  crops  the 
farmer  can  not  change  the  price  of  his  crops,  to  adjust  these 
different  modes  of  assessment  and  taxation;  the  merchant  can, 
the  farmer  can  not;  it  is  an  utter  impossibility. 

Q.  The  merchant  can  not  only  to  a  limited  extent?  A.  They 
can  a  great  deal  more  easily  concentrate  their  united  efforts  and 
control  it,  but  the  farmers  are  so  scattered  and  isolated  that  it 
is  pretty  difficult  for  they  to  combine. 

By  Mr.  Guenther.  • 

Q.  If  supply  and  demand  regulated  the  amount  of  interest 
what  object  would  there  be  in  urging  the  reduction  of  the  lei.;a; 
rate  of  interest  to  five  per  cent?    A.  As  it  is  now,  it  would  lie] 
the  borrower  somewhat, 

Q.  Then,  supply  and  demand  would  not  enter  into  it  there 
A.  Not  wholly,  but  supply  and  demand  has  a  good  deal  to 
with  it. 

Q.  Don't  you  think,  in  the  case  where  the  real  estate  owiu, 
would  pay  his  proportionate  share  of  the  tax,  and  the  holder  o 
the  mortgage  was  supposed  to  pay  his  share,  that  the  man  >v 
holds  the  mortgage  would  demand  of  the  man  that  owns  the  lam 
first  the  amount  of  the  tax  that  the  holder  of  the  mortgage  wonl 
have  to  pay?  A.  Very  likely,  because  capital  can  and  will  prc 
tect  itself  always;  capital  needs  no  protection;  it  will  take  cap 
of  itself:  the  law  is  supposed  to  protect  the  weak. 

By  Mr.  Hamilton. 

Q.  In  your  estimate  that  a  well  managed  farm  may  be 
to  produce  a  net  income  of  four  per  cent  in  your  county, 
you  made  any  allowance  for  the  compensation  for  the  daily  labc 
of  the  owner?  A.  Yes,  sir;  I  would  not  like  to  have  that 
however,  as  universally  true;  I  think  Mr.  Dibble  will  bear  me  oil 
and  Mr.  Green  here,  and  any  first  class  farmer;  the  owner  of  tba 


331 

farm  would  not  be  compensated  for  the  amount,  of  brain  work 
that  he  would  put  into  it  —  what  he  ought  to  put;  the  day  has 
gone  by  when  a  man  can  be  a  successful  farmer  without  having 
brains,  and  he  is  very  poorly  paid;  the  same  amount  of  talent 
directed  in  almost  any  other  occupation  as  successfully  as  a 
fanner  has  to  bring  his  business  to  produce  its  four  por  cent  is 
far  better  paid  than  the  farmer. 

:  Q.  Would  St.  Lawrence  pay  four  per  cent  net  after  the  farmers 
bare  paid  all  expenses  and  have  received  say  two  dollars  per 
lay  for  each  day's  labor  they  have  given?  A.  The  best  of  them 
svould. 

By  Mr.  Guenther. 

1  Q.  He  has  to  live  meanwhile?  A.  Yes;  that  is  where  a  great 
nany  farmers  forget  to  figure;  they  forget  how  often  they  hitched 
ip  and  drove  to  the  town ;  they  forget  how  many  dishes  of  ice 
{ream  and  strawberries  they  have  had;  don't  give  the  farm 
credit  for  that. 

Ij  ,Q.  Talking  about  the  mortgage  paying  its  proportionate  share 
if  taxes  upon  realty;  take,  for  instance,  the  basis  of  real  prop- 
t«Pty  in  a  city  worth  f  10,000,  with  a  mortgage  on  it  of  $5,000; 
he  tax  on  that  each  year,  perhaps,  would  amount  to  say  $160; 
:hen,  that  same  year  the  local  improvement  is  put  down  there, 
!or  paving,  amounting  to  say  $400,  and  a  sewer  put  in  there; 
vould  you  ask  the  holder  of  the  mortgage  to  pay  half  of  that  tax, 
vhen  the  tax  is  for  a  permanent  improvement,  and  that  property 
liter  the  mortgage  has  been  paid  off  will  have  that  benefit?  A. 
ttiere  is  the  difficulty;  if  any  of  you  can  devise  a  tax  law  That 
von't  be  unjust  in  some  way,  I  will  go  a  long  way  to  see  a  man 
capable  of  doing  it;  I  acknowledge  I  am  not  smart  enough  to 
lo  it;  we  have  very  much  trouble  with  equalization. 

Q.  You  mean  as  between  towns  and  counties?  A.  We  only 
Dualize  between  the  towns,  but  take  a  county  with  thirty-one 
xnviis  and  four  wards,  it  is  almost  equal  to  a  state;  there  are 
hirty-five  supervisors  on  our  board. 


.me. 
At 

8  it 


332 

Q.  Can  you  give  a  statement  of  the  approximate  amount  of 
mortgaged  indebtedness  on  farms  in  St.  Lawrence  county?  A* 
My  opinion  is  that  they  are  not  far  from  between  t<m  per  rent 
and  twelve  per  cent. 

Q.  On  the  actual  value  or  assessed  value?     A..  Assessed  value* 

Q.  And  is  such  indebtedness  increasing  or  decreasing?  A. 
present,  it  is  not  increasing;  I  think  that  the  mortgages  for 
last  year  or  two  are  being  reduced. 

Q.  What  is  the  proportion  of  real  and  personal  property  as 
appears  upon  the  tax-rolls  of  your  county?    A.  Personal  is  about 
ten  per  cent  of  the  real. 

Q.  What  is  the  actual  amount  of  personal  tax;  have  you  given 
an  opinion  as  to  that?  A.  The  actual  assessed  amount  is  between 
ten  per  cent  and  twelve  per  cent;  as  to  the  actual  amount  I  should 
not  want  to  express  an  opinion. 

Q.  In  your  opinion  does  it  approximate  the  total  value  of  real 
property?  A.  No,  sir;  it  does  not  in  our  county,  because  it  is  a 
purely  agricultural  county;  personal  property  is  not  anywhere 
near  equal  to  the  realty. 

Q.  What  is  the  condition  of  the  farming  property  in  yown 
county  as  to  increase  or  decrease  of  value  in  late  years?  A.  It 
has  decreased  very  materially;  within  twelve  or  fifteen  years  thafc 
real  property,  that  is  farm  property,  has  decreased  forty  per  cent; 
it  is  true  that  St.  Lawrence  county  has  some  very  fine  land,  buti 

we  have  an  immense  amount  of  very  poor  land. 
* 

A.  Whitney  Carr,  called  as  a  witness,  being  duly  sworn,  testified 

as  follows: 

By  Mr.  Hamilton. 

Q.  Where  do  you  reside?    A.  Jordan,  N.  Y. 
Q.  What  county?    A.  Onondaga. 
Q.  How  long  have  you  resided  there?    A.  Ten  years. 
Q.  What  is  your  occupation?    A.  I  am  laying  off. 
Q.  You  are  retired  from  business?    A.  I  have  been  a  farmer)! 
but  I  sold  my  farms. 


Q.  How  long  were  you  engaged  as  a  farmer?  A.  I  owned  farms 
all  my  lifetime,  more  or  less,  forty  or  fifty  years. 

Q.  Do  you  own  any  now?  A.  No,  sir;  I  sold  the  last  a  few 
^years  ago,  I  was  born  on  a  farm  in  this  county. 

Q.  What  have  you  to  say  as  to  the  propriety  of  modifying  the 

^resent  laws  as  relating  to  taxation,  assessmentand  interest  so 

[far  as  they  affect  the  agricultural  and  other  interests  of  the  State? 

[A.  I  think  they  ought  to  be  modified;   not  but  that  the  present 

law  is  good  enough  if  it  was  possible  to  carry  it  out;   but  it  is 

(not  possible  in  my  estimation,  and  I  have  given  the  matter  con- 

isiderable  study,  and  made  it  a  matter  of  observation  in  other 

States  as  well  as  this,  and  I  have  traveled  a  good  deal;  it  is  not 

fc  possible  in  my  estimation  to  carry  out  the  law  in  this  State  as  it 

is  now  without  modification. 

Q.  What  remedy  have  you  to  suggest  to  correct  this?  A.  I 
k  would  abandon  all  taxation  of  personal  property  directly;  I  would 
-  not  underpay  for  the  meagire  part  we  get  to  assess  personal  prop- 
erty at  all. 

I    Q.  In  what  way  then  would  you  relieve  real  estate  from  the 

r  present  burden  which  it  bears?    A.  I  would  do  it  in  this  way; 

there  is  in  my  estimation,  and  I  have  as  I  said,  given  it  consider- 

i  able  attention  —  there  is  a  way  of  reaching  personal  property  that 

I  is  effective  and  equitable. 

!  Q.  What  way  is  that?  A.  By  taxing  sales  of  all  sorts;  the  sales 
D!  all  kinds  of  property  excepting  real  estate,  and  possibly  real 
j  estate  when  a  man  makes  a  business  of  it ;  but  all  kinds  of  per- 
sonal property;  I  would  tax  all  sales,  whether  wholesale  or  retail, 
and  I  think  such  a  tax  as  that  would  alone  in  this  State,  without 
being  oppressive  and  hardly  felt  by  anybody  —  would  alone  pay 
every  dollar  of  expense  of  the  State  government,  and  yield  a 
handsome  percentage  to  be  distributed  among  the  countiesr 

Q.  Is  there  such  a  system  in  vogue  in  any  of  the  States?  A. 
There  is  not  so  far  as  I  know ;  I  am  the  originator  of  the  idea,  so 
far  as  I  know. 

Q.  Bo  you  know  whether  it  has  been  attempted  in  any  of  the 
States?  A.  No,  sir;  there  is  a  little  attempt  approaching  it  in 
Pennsylvania,  but  it  is  only  in  a  very  slight  approximation. 


334 

Q.  Would  not  that  place  upon  the  sales  of  personal  property 
the  same  excessive  burden  which  is  to-day  borne  by  real  estate? 
A.  No,  sir;  say  we  put  a  small  tax,  it  will  operate  in  this  way; 
we  put  a  tax  of  one-twentieth  to  one-fiftieth  of  one  per  cent  on 
sales;  it  would  operate  in  this  way;  the  buyer  would  have  to  pay 
the  tax,  but  it  would  be  so  small  that  it  would  enhance  the  value 
of  the  article  sold  so  little  that  it  would  not  be  appreciable 
hardly,  and  in  one  specific  article,  but  in  the  aggregate  the 
transactions  are  so  enomou*  in  the  State  it  would  yield  an 
immense  revenue. 

Q.  Wlhat   security  would   there  be  for   obtaining   accurate 
returns  of  such  sales  any  more  than  there  is  now  of  obtaining  | 
accurate  returns  of  personal  property?    A.  My  idea  is  this;  there 
would  be  no  motives  to  evade  it;  you  allow  a  man  his  oath,  which 
they  do  not  know;  it  is  optional  with  the  board  to  allow  him  his 
oath;  suppose  you  take  a  merchant  who  has  collected  that  tax,  j 
and  at  the  end  of  the  year  he  is  called  upon  to  give  an  account 
under  oath  of  the  amount  of  sales  he  has  had;  supposing  he 
sold  f  10,000  worth,  and  he  lias  one-twentieth  of  one  per  cent  to  I 
pay,  fifty  cents  on  a  thousand;  that  would  be  all  the  tax  he  would  f 
have  to  pay  on  personal  property;  that  would  give  no  chance  for 
the  iniquistorial  element;  what  people  object  to  in  taxation  is  I 
the  inquisitorial  prying  into  their  affairs,  and  the  unscrupulous  -j) 
will  swear  falsely  and  get  rid  of  it  that  way  and  the  mean  people  | 
will  dodge  it,  and  it  is  left  to  the  simple  minded  or  ignorant  to  | 
pay,  take  for  instance  Massachusetts,  which  is  held  forth  as  a  J 
model  State  because  forty-sevtn  per  cent  of  the  personal  property  I 
assessed  is  reached  under  the  inquisitorial  system;  now  to  the  } 
extent  of  fifty-three  per  C3iii;  of  personal  property  is  therefore  i 
oppressive  to -the  forty-seven  that  pays;  it  is  only  a  question  of 
the  degree  in  this  matter  of  taxation  of  personal  property;  here  in  I 
this  State  at  least  ninety  per  cent  of  personal  property  escape* 
entirely  by  hook  or  by  crook,  and  then  in  my  opinion  it  is  gene- 
rally all  crook;  still  it  is  only  my  opinion;  I  don't  wish  to  con- 
demn other  people;  now,  wiiat  I  would  do  is  to  tax  the  sales  of 
everybody,  wholesale  or  retail,  and  then  the  man  who  buys  the 
most  pays  the  largest  taxes;  the  man  who  furnishes  his  family  the 


ost  with  horses  and  carriages,  etc.,  and  maintains  the  greatest 
yle,  that  man  pays  the  biggest  taxes;  as  it  is  now  he  don't;  a 
an  like  Jay  Gould,  for  instance,  pays  only  on  $500,000  and  died 
orth  $70,000,000;  a  great  deal  of  personal  property  is  specifi- 
lly  exempted  by  the  law  of  the  land,  bank  currency,  green- 
icks,  bonds  in  the  United  States  are  non-assessable;  no  locality 

municipality  can  tax  th3m  and  if  they  do  assess  them  the 
urts  will  exempt  them;  that  is  a  very  large  share;  then  savings 
a,nks,  those  accumulations  in  the  State,  they  are  exempt  and 
ey  ought  to  be;  they  are  the  savings  of  men  that  are  poor 
en  as  a  general  thing;  it  is  the  average  I  believe  of  deposits 

this  State  is  $385,  and  to  tax  them  would  be  to  crush  out  the 
ibit  of  saving  among  poor  people,  and  I  think  it  is  undertaking 

collect  at  the  spigot  what  will  go  out  at  the  bung-hole  as  the 
d  saying  is. 

Q.  What  computation,  if  any,  have  you  made  as  to  the  amount 
at  would  be  produced  by  a  tax  of  that  kind?  A.  Senator  Lowe 
ith  whom  I  had  considerable  correspondence  several  years  ago 
efore  this  collateral  and  inheritance  tax  was  established  — 
ventured  to  suggest  it  would  be  six  millions  and  he  said  it 
ould  be  double  that;  the  rate  I  mentioned  of  one-twentieth  of 
per  cent  that  was,  since  then  I  have  made  a  little  further 
enervation  on  the  exchanges  in  New  York  city  and  several 
nds  of  exchanges  have  been  established,  and  I  think  that  the 
^changes  alone  in  New  York  city,  not  to  speak  of  other  cities, 

one-twentieth  of  one  per  cent  tax  on  the  face  value  of  each 
ansaction  would  produce  revenue  enough  to  sustain  the  State 
>vernment  for  many  years. 

Q.  You    include    in   that    transactions   in   Wall   street?     A. 

sir;    everything    personal;    all    dealers    who    make    it    a 

isiness   as  dealers  ought  to  pay  this  tax,   and    in    order    to 

effected  any  tax  must  be  put  in  such  shape  as  not  to  be 
isily  evaded,  or  in  other  words  to  place  people  so  that  they 
|ould  not  be  under  temptation  to  evade  it;  now  what  is  at  in 
iis  system  that  will  prevent  men  from  avoiding  or  attempting 

avoid  taxation;  now,  take  a  merchant;  here  is  Mr.  Day,  and 

is  probably  as  prosperous  a  merchant  as  there  is  in  this  city; 


ible 

>* 

oen 


336 

supposing  his  sale  of  $500,000  a  year;  one-twentieth  of  on; 
per  cent  would  be  $5,000;  probably  his  present  taxes  are  doubli 
that;  it  would  result  as  a  benefit  to  him,  and  there  would  not 
any  temptation  to  evade  it;  I  am  an  advocate  of  having  good  mei 
and  women;  I  believe  that  we  can  have  men  that  would  tell  tb.e 
truth  and  tell  it  under  oath,  but  I  think  it  is  judicious  to  avoid 
placing  temptation  in  the  way  of  people,  especially  where  they  ai?e 
interested;  it  tempts  them  into  an  evasion  of  the  law;  this  would 
avoid  that  temptation;  now  then,  as  to  the  equity  of  the  thini*;! 
of  course  if  you  tax  all  sales,  wholesale  and  retail,  you  tax  the 
same  article  over  and  over  again;  that  is  to  be  expected,  but  that 
is  not  an  uncommon  thing;  now,  you  take  the  tariff;  that  taxes 
the  goods  when  they  come  from  foreign  countries;  then  the  jobber, 
if  he  is  honest,  he  reports  to  the  local  assessor  the  full  amount 
of  his  goods;  the  law  says  he  shall  report  the  full  amount  of  Mg 
stock,  although  they  do  not  conform  to  it  probably;  there  is  a 
second  tax ;  then  the  country  jobber  that  he  sells  to  at  Buffalo  anc 
other  places,  he  has  to  pay  his  tax  on  it;  then  he  sells  to  the 
retailer,  and  the  retailer  pays  his  tax,  but  the  taxation  on  sale* 
would  permit  of  putting  the  rate  of  taxation  so  low  that  it  would) 
not  be  oppressive;  that  is  the  way  I  look  at  it. 

Q.  Would  it  not  be  necessary  to  have  inquisitorial  laws,  ai| 
they  are  called,  in  order  to  ascertain  the  amount  of  sales?    A, 
No,  sir;  I  think  that  the  oath  of  most  people  would  be  allowed  aij 
to  the  amount  of  the  sales,  and  in  my  experience  with  dealers 
should  say  there  would  be  more  liability  for  them  to  overstatj 
their  sales  than  to  understate  them;  you  might  ask  me  why,  ato- 
my answer  would  be  this,  that  most  dealers  want  to  stand  welj 
in  the  commercial  world,  and  they  would  be  willing  to  pay  large 
taxes  for  the  credit  it  would  give  them ;  I  have  known  men  to 
that  for  the  commercial  standing  it  gave  them;  and  as  v^ell  a 
that  there  would  not  be  that  temptation  to  avoid  it;  it  woul 
not   be   inquisitorial   only  so  far  as   this  —  it  would   give  th' 
amounts  of  their  sales,  and  their  books  would  show  it;  now, 
how  it  would  operate  in  our  little  town;  the  shoemaker  who  d< 
$1,000  worth  of  business  pays  fifty  cents  tax;  our  grocers  — 
have  seven  or  nine  of  them,  and  their  sales  are  from  $9,000  1 


110,000  a  year;  you  see  what  their  taxes  is  at  fifty  cents  on  the 
i.,000;  then  our  manufacturer,  Mr.  Warner,  who  manufactures  I 
lon't  know  how  much,  probably  f  100,000  a  year,  but  I  can  not 
jell  you  a  great  deal  about  that. 

1  Q.  Have  you  any  other  suggestions  to  make  to  the  committee 
\p.  regard  to  this?  A.  Yes,  sir;  I  would  like  to  have  our  laws  in 
legard  to  the  assessment  of  real  estate  altered;  I  would  like 
ID  have  the  assessors  empowered  and  required  to  administer  an 
lath  as  to  real  estate,  and  as  to  the  real  cash  value  of  the  estate; 
t  think  we  are  more  likely  to  get  a  just  valuation  of  our  realty 
pan  we  are  under  the  present  system,  leaving  it  alone  to  the 
judgment  of  the  assessor,  because  then  we  would  have  the  sworn 
Lidgment  or  estimate  of  the  owner  who  knows  more  about  it  than 
laybody  else,  and  then  the  result  would  be  that  the  assessor 
iould  put  it  down  as  he  chose,  but  he  would  have  the  benefit  of 
lie  sworn  statement. 

•  Q.  Not  to  make  it  binding  on  the  assessor?    A.  No,  sir;  but 
fcvisory;  then  I  would  tax  banks  and  banking  offices  on  the 
•nount  of  their  loans  and  discounts,  or  in  other  words  just  as  T 
iould  the  merchants  on  their  business;  so  I  would  telegraph  and 
Kephone  and  railroad  companies,  and  if  the  principal  of  a  grad- 
ated tax  is  sanctioned  ultimately  by  our  higher  courts,  which 
I  have  some  doubt  about  —  if  that  is  sustained,  then  have  a 
•faded  tax  on  incomes  and  a  graded  tax  on  inheritances,  :md  I 
Mink  that  would  be  very  equitable  and  a  desirable  way  of  taxa- 
•m;  I  am  in  favor  of  the  principle  of  a  graduated  tax,  but  my 
Bar  is  that  our  higher  courts  would  not  sustain  it. 
•Q.  It  might  be  held  to  be  unconstitutional  you  think?    A.  Yes, 
*|P;   I  am  afraid  they  would  say  it  would  be  inequitable  to  tax 
Tainan  because  he  happened  to  have  $10,000,  a  higher  rate  than 
'•other  who  had  $1,000,  but  there  is  one  thing  about  it,  taxation 
i  confiscation  of  private  property  any  way  you  put  it. 
f  jQ.  It  is  when  you  tax  the  owner  but  it  is  not  when  you  tax  the 
feeritan.ce,  because  the  law  creates  the  inheritance.     A.  I  think 
Rat  is  an  equitable  thing;  I  would  carry  it  a  little  farther  than 
wual;  I  would  carry  our  legacy  tax  on  large  amounts  far  higher 
43 


than  you  do;  I  see  the  Comptroller  Campbell  is  in  favor  of  a 
much  larger  rate  on  large  amounts  —  a  graded  tax,  and  if  it  Ls 
so  to  the  financial  officers  of  the  State,  I  think  he  must  have  had 
some  consultation  with  the  higher  courts  or  the  judges,  in  order 
to  come  out  in  that  way;  I  had  questions  about  that;  I  believe  in 
the  principle;  I  think  it  is  just  and  right;  but  so  long  as  property 
can  be  concealed  men  will  be  found  mean  enough  to  conceal  it;  I1 
think  we  ought  to  take  things  as  we  find  them,  and  practically, 
not  more  for  the  miserable  pittance  of  ten  per  cent  or  fifty  per 
cent  or  thirty-three  per  cent  as  they  have  in  Pennsylvania  of> 
personal  property;  for  that  meager  amount  I  say  exempt  it  all- 
only  in  this  indirect  way,  and  it  will  be  found  more  equitable  and 
more  satisfactory  to  everybody  concerned.  3 

Q.  Every  time  it  made  its  appearance  you  would  tax  it?  A. 
Yes,  sir;  every  time  it  changes  hands;  I  would  have  bonds  and 
securities  of  no  use  unless  they  were  stamped. 

Q.  Whenever  it  shows  its  head  hit  it?  A.  Yes,  sir;  Senator 
Low  asked  me  this  question:  How  could  you  enforce  this  oni 
sales ;  I  told  him  I  would  make  every  transaction  in  New  York  or  j 
on  any  exchange,  whether  New  York  or  elsewhere,  and  any  debt 
that  migjht  be  contracted,  have  it  non-collectable  in  any  court 
unless  it  had  the  stamp  equivalent  to  this  one-twentieth  of  one  pen 
cent  on  the  certificate  of  stock  or  note  or  whatever  it  was  that! 
was  transferred,  and  in  case  of  option  and  such  straddles  and! 
things  mentioned  in  the  exchange  1^  would  have  attached  to  the  I 
receipt  the  stamp  that  is  required  for  the  amount  of  the  trans- 1 
action;  a  great  many  say  some  brokers  have  said  that  would  navel 
the  effect  of  driving  our  business  to  Jersey  City;  I  say,  no,  sir;! 
it  was  tried  during  the  war;  how  did  that  operate;  that  taxi 
was  paid  by  the  man  that  bought  the  bond  of  the  stock;  it  was! 
added  to  the  percentage  that,  the  man  charged  for  doing  busi-j 
ness;  so  it  was  not  any  detriment  to  the  broker;  he  would  consent! 
to  it;  I  think  so  far  as  my  observation  is  concerned  that  tliei 
people  are  now  ready  for  something  more  effectual  to  reach  perl 
sonal  property;  I  have  utterly  lost  all  hope  of  reaching  personall 
property  by  any  direct  effort;  I  don't  believe  it  is  possible;  l'| 


339 

think  if  every  assessor  could  do  as  they  did  in  old  Borne,  put  the 
thumb  screws  on  them,  and  draw  it  to  make  a  man  divulge  what 
he  has  got>  it  would  not  be  effectual  any  more  than  it  was  then; 
hence  I  would  not  undertake,  while  it  is  perfectly  just  that  he 
should  do  it;  I  would  not  undertake  an  impossibility;  but  in  this 
way  by  taxing  sales,  you  have  a  reasonable  and  effective  mode  of 
taxation,  and  it  will  reach  every  single  man;  no  man  so  rich  or 
shrewd  or  unscrupulous  that  he  will  escape  it;  he  pays  a  tax  on 
every  bit  of  clothes  that  he  wears,  every  harness  for  his  horse 
and  all  he  squanders. 

Q.  Have  you  any  authentic  figure  as  to  what  the  transactions 
are  in  stocks  on  Wall  street?  A.  They  vary  from  year  to  year, 
but  they  are  as  high  as  60,000,000  in  a  single  day;  you  can  multi- 
ply that  by  300;  it  is  called  small  business  down  there  to  do 
fifteen  or  sixteen  millions  a  day;  then  there  are  the  cotton 
exchange,  the  produce  exchange,  and  all  other  exchanges  would 
be  added  to  it. 

A.  0.  Brundage,  called  as  a  witness,  being  duly  sworn,  testified 
as  follows: 

By  Mr.  Hamilton. 

Q.  You  reside  at  Bath,  Steuben  county?  A.  That  is  my  post- 
joflice;  T  live  in  the  town  of  Urban. 

Q.  Your  business  is  what?    A.  Farmer. 

Q.  How  long  have  you  been  so  engaged?  A.  I  have  been 
| twenty- nine  years  in  the  conduct  of  a  farm  myself. 

Q.  Have  you  pursued  any  other  business  in  connection  with 
it?  A.  No,  sir. 

Q.  You  have  represented  your  county  in  the  State  Legislature? 
;A.  Yes,  sir;  from  my  district. 

Q.  How  many  times?    A.  Four  times. 

Q.  During  what  years?  A.  Eighteen  hundred  and  seventy- 
ight  and  1S79,  and  again  in  1887  and  1888. 

Q.  Have  you  also  acted  as  supervisor  or  assessor?    A.  No,  sir. 

Q.  Are  you  a  member  of  the  State  Grange?  A.  T  am  a  mem- 
of  a  subordinate  grange. 


340 

Q.  Are  you  a  member  of  the  Farmers'  Alliance?    A.  No,  sir. 

Q.  Have  you  given  to  this  question  of  taxation  some  study  a: 
attention?     A.  Yes,  sir;  some  years  ago;  not  very  recently. 

Q.  I  believe  you  are  the  father  of  what  was  known  as  tl 
Brundage  Tax  bill?    A.  I  had  the  honor  to  introduce  it. 

Q.  Which  included  what  is  known  as  the  tax  listing  systei 
A.  Yes,  sir. 

Q.  From  your  experience  and  examination,  what  have  you  to 
say  as  to  the  propriety  of  modifying  the  present  laws  relating 
to  taxation,  assessment  and  interest,  so  far  as  they  affect  the 
agricultural  and  other  interests  of  the  State?  A.  I  believe  it 
to  be  a  fair  proposition  that  all  property  should  pay  its  share; 
make  no  exemption  except  such  as  naturally  and  necessarily 
belongs  to  the  State;  T  think  some  system  should  be  devised 
by  which  not  only  shall  real  estate  pay  taxes,  but  that  all  per- 
sonal property  should  pay  its  tax;  I  say  this  as  a  rule  that  per- 
sonal property  is  more  remunerative  as  property  and  more  expense 
to  the  State  to  take  care  of  it  and  protect  it,  and  I  know  no 
reason  why  a  man  that  chooses  to  invest  his  money  in  bonds  and 
mortgages  on  somebody  else's  real  estate  shall  be  guaranteed- 
a  specific  net  income,  while  he  who  has  some  other  property 
shall  take  his  chances  in  the  scramble  for  position  and  profit;  so 
that  I  see  no  reason  why  a  gentleman  who  owns  a  bond  and  mort- 
gage, if  he  should  happen  to  have  one  on  iny  farm  or  business, 
should  be  exempt  from  paying  his  share  of  the  tax,  as  I  am 
required. 

Q.  You  know  of  the  very  wide-spread  opposition  to  the  listing 
system?  A.  I  know  there  is,  coming  principally  from  the  fact- 
as  a  gentleman  said  before,  they  would  be  hi  favor  of  a  listing 
system  if  it  could  be  effective,  and  it  seems  to  me  a  scheme  can 
be  devised  to  make  it  effective;  it  seems  to  me  that  the  Legis- 
lature might  enact  a  law  which  will  provide  for  the  listing  sys- 
tem in  the  customary  way,  and  that  when  in  the  judgment  of  the 
board  of  assessors  any  person  fails  in  their  judgment  to  give 
a  fair  return  of  the  personal  property  in  his  possession,  that  that 
board  shall  be  empowered  by  the  law  to  make  a  report  to  the 


341 

judge  —  the  county  judge  or  Supreme  Court  judge  —  asking  for 
the  appointment  of  a  referee  to  take  this  question  into  considera- 
tion here  and  determine  the  facts;  if  this  property  can  be  dis- 
covered, I  think  the  objection  to  the  inquisitorial  system  to  which 
the  gentlemen  so  much  object  would  apply  not  so  much  from 
the  fact  of  the  public  knowing  their  financial  position,  if  they 
understand  their  neighbor  is  to  be  known  too;  you  have  no 
objection  to  it  being  known  that  you  have  $50,000  or  10,000;  I 
should  certainly  not  object  to  that  —  to  have  it  known  that  I 
was  worth  $25,000,  when  my  neighbor's  affairs  were  to  have^ 
the  same  light  turned  on  to  them. 

By  Mr.  Guenther. 

Q.  In  the  city  of  Buffalo,  I  run  a  place  and  carry  a  stock 
of  $50,000;  I  have  paper  outstanding  for  $50,000;  nobody 
knows  it  except  the  man  I  borrow  money  from;  what 
effect  would  that  have  on  my  credit  if  it  was  known 
that  1  had  this  amount  of  $50,000  of  debt?  A.  I  don't 
know  that  I  have  considered  that  question  far  enough  to  say,  but  I 
am  not  making  any  exemptions  on  any  sort  of  property,  and  right 
there  I  want  to  say  that  one  of  the  reasons  why  this  discrepancy 
in  the  assessment  of  real  estate  exists  conies  from  the  fact  of 
there  being  under  the  law  this  exemption  allowed  for  debt 
resting  against  personal  property;  he  is  allowed  exemption  to  the 
extent  of  his  debts;  it  is  absolutely  indefinite;  if  a  man  holds  one 
or  two  thousand  dollars  in  government  bonds,  exempt  under  the 
law  from  taxation,  he  allows  it  to  be  understood  by  the  assessor 
that  bis  personal  property  is  all  invested  in  government  bonds. 

Q.  The  ultimate  object  of  having  this  listing  system  would 
be  reaching  personal  property  and  decreasing  the  tax  upon  real 
property  so  far  as  State  purposes  only  are  concerned?  A.  I  don't 
quite  understand  why  we  are  obliged  to  use  that  term  for  State 
purposes  only,  for  the  reason  that  there  is  just  as  much  difficulty 
in  the  other. 

Q.  It  has  been  suggested  by  some  of  the  witnesses  to  have  a 
divorce  of  the  State  and  county  —  to  permit  local  option;  now,  if 
we  had  no  State  tax,  could  you  allow  each  county  —  let  the  super- 


3,42 

visors  provide  a  listing  system  if  they  wanted  to,  and  put  it  on 
personal  property  or  real  property;  and  in  that  case  would  you  be 
in  favor  of  local  option  for  each  county?  A.  Possibly  to 
extent  that  the  board  of  supervisors  could  determine  whc 
or  not  a  listing  system  shall  be  in  vogue;  it  should  be  uniform. 

Q.  Do  you  think  the  condition  of  the  farmer  to-day  is  owing 
the  tax  upon  his  property?  A.  Only  in  a  very  moderate  degree. 

Q.  It  is  very  moderate  is  it  not?  A.  I  say  it  is  moderate; 
course,  the  figures  that  have  been  shown  here  to-day  show  that 
would  simply  go  to  pay  some  of  the  interest  on  his  indebtednc 

By  Mr.  Stranahan. 

Q.  When  you  were  in  Albany  giving  some  attention  to 
subject  of  taxation,  did  you  discover  that  your  ideas  as  expressed 
in  your  bill  were  very  strongly  combated  by  all  people  from  the 
different  cities  of  the  State?  A.  From  banking  institutions? 

Q.  I  mean  by  the  representatives  in  the  Legislature;  did  you 
find  that  those  from  the  cities  were  unanimous  in  their  opposition? 
A.  Largely  so. 

Q.  isow,  you  have  watched  the  operation  of  the  Legislature  on 
this  subject  since  that  time  and  know  if  that  opposition  still 
continues?  A.  Yes,  sir;  very  largely. 

Q.  Has  it  occurred  to  you  that  since  the  recent  apportionment 
giving  a  larger  representation  to  the  larger  cities  of  the  State, 
New  York,  Brooklyn  and  Buffalo,  that  that  element  representing 
the  opposite  idea  from  your  own  are  nearly  if  not  quite  sufficiently 
strong  to  enact  such  legislation  as  they  see  fit  upon  this  subject? 
A.  I  think  that  would  be  the  case. 

Q.  Does  it  riot  occur  to  you  at  that  time  in  view  of  what  I 
suggested  that  there  are  irreconcilable  differences  in  certain 
counties  in  the  State  with  reference  to  the  method  which  shall 
be  pursued  on  the  subject?  A.  Yes,  sir;  I  think  so. 

Q.  If  that  is  true,  and  those  differences  are  irreconcilable,  and 
that  which  is  desirable  in  one  community  is  not  in  another,  is  not 
the  most  reasonable  solution  local  option?  A.  Yes,  sir;  in  that 
view  of  the  case;  this  question  of  local  option  I  never  considered 
until  I  heard  it  discussed  to-day. 


Q.  It  means  that  the  board  of  supervisors  in  the  county  of 
Steuben.  if  you  please,  shall  have  the  power  to  say  upon  what 
species  of  property  and  in  what  manner  it  shall  levy  taxation  for 
local  purposes,  and  in  the  county  of  New  York  the  board  of 
aldermen  may  say  there  that  they  will  levy  it  only  upon  real 
estate  and  exempt  personal  property  entirely;  how  would  that 
system  operate?  A.  I  can  see  where  there  might  be  some  satis- 
faction come  out  of  that,  and  it  seems  to  me  that  it  might  be 
somewhat  popular  in  the  county. 

By  Mr.  Guenther. 

\ 
Q.  Supposing  that  in  the  county  of  Chautauqua  they  should  tax 

both  personal  property  and  real  for  the  purpose  of  meeting  the  local 
expenses,  and  Erie  county  should  say  they  will  tax  only  real 
estate,  would  not  that  be  the  cause  of  taking  all  the  personal 
property  out  of  Cliautauqua  and  placing  it  in  Erie;  what  is  your 
opinion?  A.  I  am  of  the  opinion  that  when  we  come  to  tax  all 
property  we  find  the  taxes  so  modified  and  smaller  in  proportion 
than  we  have  been  in  the  habit  of  paying,  that  there  will  be  less 
objection;  public  judgment  and  patriotism  would  lead  them  to 
regard  it  in  a  proper  light;  as  has  been  suggested  by  some  gentle- 
man preceding  me,  there  ha*  been  considerable  sentiment  in  the 
direction  of  exempting  certain  classes  of  property,  so  that  you 
are  enacting  laws  each  year  exempting  certain  classes  of  prop- 
erty from  taxation;  people  seem  to  be  drifting  that  way;  if  you 
turn  and  say  that  all  property  shall  be  taxed,  that  every  man 
shall  be  considered  a  good  citizen  if  he  stands  up  like  a  man 
and  pays  his  tax  there  will  be  less  disturbance. 

Q.  Have  you  ever  figured  out  what  proportion  in  Steuben 
county  your  State  tax  is  to  your  local  tax?  A.  I  have  known  it 
but  I  am  not  able  to  give  it  now. 

Q.  It  is  one  to  five.  A.  That  is  one  of  the  fallacies  of  •  the 
farmers;  they  fail  to  take  that  into  account;  our  grievance  is  not 
between  the  several  counties  one  as  against  the  other  but 
because  my  neighbor  does  not  pay  the  tax  that  I  do;  my  neighbor 
who  owns  a  farm  immediately  adjoining  me  has  succeeded  in 


344 

having  a  great  amount  of  personal  property  and  he  pays  a  mej 
bagatelle. 

Q.  Farmers   overlook   the   fact   that   the   greatest    burden 
local  taxation?    A.  Yes,  si«*. 

Q.  So  long  as  this  present  system  of  taxation  is  in  vogue  tl 
will  consider  that  it  is  Stare  taxation  that  is  the  burden? 
Yes,  sir. 

By  Mr.  Hamilton. 

Q.  Could  not  the  objection  that  in  case  of  local  option  personal 
property  would  seek  to  avoid  localities  where  it  was  taxed  be 
in  a  large  manner  overcome  by  giving  the  right  to  the  localities 
to  tax  personal  property  where  it  was  located  without  regard 
where  the  owner  was  ?  A.  It  seems  to  me  that  would  obviate  the 
difficulty. 

Q.  What  do  you  say  as  to  the  approximate  amount  of  niorfl 
gage  indebtedness  on  farms  in  your  county?  A.  I  have  no 
definite  information  on  that  subject,  but  my  judgment' is  that  it 
is  not  large — ten  or  twelve  per  cent. 

Q.  Do  you  know  whether  such  indebtedness  is  increasing  oiH 
decreasing  for  the  past  few  years?  A.  In  conversation  with 
gentlemen  who  have  some  right  to  know,  I  am  of  the  opinion  thatj 
there  has  been  no  increase  and  in  some  instances  -there  has  beettj 
some  decrease,  more  especially  during  the  last  year  or  two. 

Q.  Do  you  know  the  comparative  value  of  real  and  personal] 
property  in  your  county?  A.  The  assessed  value? 

Q.  No,  sir;  the  actual  valae?  A.  No,  sir;  nothing  very  definite! 
except  the  general  opinion  that  the  personal  property  is  seventy- 
five  or  eighty  per  cent. 

Q.  And  yet  as  it  appears  on  the  assessment-roll  it  amounts  toj 
how  much?  A.  About  one  to  eleven. 

Q.  Now,  of  late  years  has  farming  property  in  your  county] 
been  increasing  or  decreasing  in  value?    A.  There  has  been 
increase,  and  our  county  I  think  is  somewhat  an  exception  becauii 
of  the  character  of  the  products;  we  have  a  large  grape  growii 
country   generally   and   it   i>   holding  its   own;   we  have   la 


potato  growing  sections  and  they  have  been  very  remunerative; 
we  produce  a  very  fine  quality  and  great  quantities  of  them  in 
some  sections,  and  in  no  sections  are  the  highest  priced  lands  in 
the  county  to-day  outside  of  the  vineyards. 

Q.  The  vineyard  is  practically  a  new  industry  in  the  last 
decade?  A.  Yes,  sir. 

Q.  What  have  you  to  say  'is  to  the  increase  or  decrease  of  well 
managed  farms  or  vineyards  in  your  county?  A.  My  impres- 
sion is  that  farmers  are  generally  very  widely  astray  in  their 
estimates  for  the  reason  that  they  do  not  conduct  their  business 
properly,  and  do  not  give  their  farms  correct  returns  of  the 
products  from  them. 

Q.  Do  you  know  of  any  instance  where  capital  has  been  driven 
from  the  State  by  restrictions  placed  upon  corporations?  A. 
No,  sir. 

Q.  What  is  the  sentiment  of  your  community  in  regard  to  the 
question  of  taxing  mortgages?  A.  Very  generally  in  favor  of  it 

Q.  What  is  it  in  regard  to  the  question  of  allowing  an  offset 
for  personal  indebtedness?  A.  There  is  opposition  to  that  among 
the  most  intelligent  people;  they  believe  it  is  not  right,  and  that 
it  has  led  to  such  abuses  in  its  operation. 

Q.  What  is  the  sentiment  of  your  community  in  regard  to  the 
present  rate  of  interest?  A.  So  far  as  I  have  heard  expressions 
of  it  I  hardly  dare  answer  that  question;  I  hear  expressions  both 
ways;  I  think  among  the  lighter  class  of  borrowers  and  the  people 
of  more  moderate  circumstances  the  disposition  is  decidedly  in 
favor  of  reducing  the  interest,  but  among  the  better  class  of 
farmers,  and  I  live  in  a  community  where  I  am  largely  surrounded 
by  a  very  good  class  of  farmers,  the  general  feeling  is  that 
it  would  hardly  be  to  the  advantage  of  the  farmers  to  reduce  the 
interest. 

Q.  Do  you  believe  it  desirable  that  the  State  tax  should  be 
collected  solely  by  the  State?  A.  Yes,  sir. 

Q.  And  thereby  to  avoid  the  question  of  difference  in  equaliza- 
tion between  counties?     A.  Yes,  sir. 
44 


OF  THE 
TINT  VlPTP  QTT-  V 


Q.  Do  you  believe  as  a  result  of  that,  if  it  can  be  satisfactorily 
established,  that  a  local  option  law  would  meet  with  the  views  ot 
your  community?  A.  I  regard  that  as  a  new  question;  it  is  to; 
me;  I  have  never  heard  it  discussed  in  that  form. 

Q.  What  is  the  sentiment  of  your  community  in  regard  to  the 
inheritance  tax?  A.  Very  largely,  I  think,  in  favor  of  it,  ;md 
of  the  improved  scheme  suggested  by  our  comptroller,  a  gradu-| 
ated  tax,  and  some  increase  in  the  line  of  putting  some  further 
taxation  on  corporation,  and  as  has  been  suggested  to-day,  taxing 
the  bonded  indebtedness  of  corporations. 

Q.  And  in  regard  to  savings  bank  deposits?  A.  We  have  veryl 
little  to  do  with  them;  we  have  no  savings  banks  in  our  county. 

Q.  Have  you  any  suggestions  to  make  to  the  committee  to 
which  your  attention  has  not  been  called  on  the  subject  of 
ation?    A.  I  had  but  I  don't  recollect  them  now. 

Q.  Do  you  regard  the  difficulty  as  it  exists  to-day  in  the  collec- 
tion of  taxes  as  owing  to  the  condition  of  the  law  or  to  the  laxity 
of  its  administration?  A.  Growing  out  of  both  there  is  a  long- 
continued  abuse  in  that  direction;  a  precedent  has  been  so  well 
established  —  the  scheme  by  which  a  man  may  claim  that  ho  is 
in  debt  and  get  off  from  his  assessment  and  that  very  fact  has 
resulted  in  a  different  rate  on  the  real  estate  so  that  in  some 
counties  it  is  forty,  fifty  and  seventy-five  per  cent;  I  apprehend 
that  came  from  the  system  of  making  an  allowance  on  personal 
property  for  the  indebtedness;  the  disposition  to  even  up  with 
the  man  holding  real  estate  is  the  result,  because  his  neighbor  had 
an  allowance  for  personal  debt. 

Q.  What  remedies,  if  any,  occur  to  you  to  overcome  these 
difficulties?  A.  I  don't  regard  it  possible  to  secure  a  proper 
enforcement  of  the  law  as  it  now  stands;  it  seems  necessary  that 
some  radical  changes  shall  be  made,  and  extending  the  power 
and  authority  of  some  of  the  officers,  so  that  personal  property 
shall  be  more  effectually  secured. 

Q.  You  think  that,  together  with  the  adoption  of  the  listing 
system,  would  accomplish  the  desired  result?  A.  In  view  o$ 
this  condition  of  affairs  that  exist  on  Mr.  Stranahan's  suggestion, 
the  opposition  to  that  sort  of  legislation  which  conies  so  largely 


from  the  cities,  and  they  are  now  more  than  ever  in  the  pre- 
ponderance, the  necessity  is  suggested  of  going  still  farther  for 
|a,  remedy;  I  have  been  thinking  over  the  subject  since  my 
xperience  with  the  tax  bill  in  the  Assembly;  the  more  I  have  seen 
nd  heard  of  it  the  more  I  have  become  convinced  that  there  is  no 
ther  way;  it  seems  to  be  inevitable  that  either  one  or  other 
Iternative'must  come;  I  have  been  trying  to  educate  myself  that 

personal  property  were  entirely  exempted  from  taxation,  benefits 
rould  result  to  the  farmer,  so  that  they  would  be  able  to  get 
Dans  more  readily;  I  say  that  one  or  the  other  is  inevitable. 

Q.  You  were  present  during  Mr.  Carr's  examination?  A.  i'es, 
IP. 

Q.  You  heard  his  scheme  relative  to  the  taxation  of  sales?  A. 
res,  sir. 

Q.  How  in  your  judgment  would  that  meet  the  requirements? 
L  It  seems  to  me  to  be  wholly  impracticable. 

Q.  Why?  A.  For  the  reason  that  it  depends  entirely  upon  the 
onor  of  the  man  making  the  statement;  you  must  have  his  oath, 
ind  have  his  statement  that  way,  and  he  is  no  better  off  than  he 
8  under  a  listing  system  or  under  the  present  system  even;  you 
ake  his  statement  and  that  is  the  end  of  it;  it  is  really  a  vision- 
wry  scheme  so  far  as  I  can  see. 

By  the  Chairman. 

Q.  You  think  that  the  successful  carrying  out  of  a  tax  law 
lepends  entirely  upon  the  ability  of  the  other  fellow  to  grasp  the 
jroperty?  A.  Yes,  sir;  find  it  first,  then  you  can  assess  it  easy 
Jiough. 

Q.  Wouldn't  it  be  safe  to  depend  on  the  owner?  A.  No,  sir; 
)ur  experience  has  taught  us  that. 

By  Mr.  Guenther. 

Q.  You  think  a  considerable  amount  is  not  collected  on  personal 
roperty  by  reason  of  swearing  it  off  by  indebtedness?  A.  There 
a  a  very  little  of  that  done  by  swearing  off;  it  is  done  by  persuad- 
ng  the  assessors  by  one  scheme  and  another. 


348 

Q.  Your  assessment  books  for  the  purpose  of  taxing  personal 
property  are  open  up  to  a  certain  day  in  your  town?  A.  Yai 
sir. 

Q.  What  do  you  think  of  extending  the  power  of  the  assessor! 
in  the  case  of  a  man  who  comes  in  and  swears  off  a  certain  amount 
of  his  assessment,  to  allow  the  assessors  to  place  that  against  1i 
person  who  holds  that  indebtedness?    A.  I  think  it  will  bo 
good  idea;   any  scheme  that  will  help  to  discover  personal  pro] 
erty  would  be. 

The  committee  then  adjourned  to  meet  December  thirtiel 
10  a.  m. 


Syracuse,  N.  Y.,  December  30,  1892. 1 
The  committee  met  pursuant  to  adjournment. 

Edward  F.  Dibble,  called  as  a  witness,  being  duly  sworn,  tests 
fied  as  follows: 

By  Mr.  Hamilton. 

Q.  Where  do  you  reside?    A.  Honeoye  Falls,  Livingjston  coun|j 
but  the  post-office  is  in  Monroe  county. 

Q.  What  is  your  business?    A.  I  am  a  farmer. 

Q.  How  long  have  you  been  engaged  in  that  occupation? 
Since  I  attained  my  majority. 

Q.  Are  you  engaged   in  any  other  business?    A.  No,  sir; 
make  a  specialty  on  my  farm  of  seed  growing,  still  I  am  strict! 
speaking  a  farmer. 

Q.  You  are  a  member  of  the  Fanners'  Alliance?    A.  I  am  pree 
dent  of  the  State  alliance. 

Q.  Are  you  also  a  member  of  the  grange?    A.  I  have  not  tha 
honor;   no,  sir. 

Q.  Have  you  been  connected  with  any  public  office  beariB 
upon  the  question  of  taxation?    A.  I  have  not. 

Q.  In  your   capacity   as   president  of  the   alliance   have  yo 
investigated  the  subject  of  taxation?    A.  I  have. 

Q.  What  have  you  to  say  as  to  the  propriety  of  modifying 
present  laws   in  relation  to   taxation,   assessment  and   intern 


349 


far  as  they  affect  the  agricultural  and  other  interests  of  the 

?    A.  They  would  be  changed  most  decidedly. 
Q.  Can  you  give  us  the  approximate  amount  of  the  mortgage 
idebtedness  on  farms  in  your  county?    A.  Well,  I  could  be  able 
give  3rou  the  exact  amount  if  the  United  States  government 
rou Id  enter  the  amount  on  its  census  report;  our  government  took 
air  counties  in  this  State  and  took  the  mortgage  indebtedness; 
ie\  took  the  town  of  Lima  four  different  times  but  they  have 
|ever  yet  reported;  the  mortgage  indebtedness  was;  so  alarming 
ley  were  afraid  to  report  it;  in  the  town  of  Lima  every  farm 
|i  the  township  but  twenty -five  is  mortgaged  and  Lima  is  one  of 
best  townships  in  the  State  of  New  York,  situated  in  the 
icsee  valley,  the  center  of  a  fertile  country;  in  this  township 
are  mortgaged  but  twenty-five  and  fyalf  of  them  are  mortgaged 
all  they  would  sell  for  to-day  under  the  hammer;  Livingston 
unity  is  mortgaged,  in  my  opinion,  for  more  than  $6,000,000; 
.Uejzany  county,  upon  the  authority  of  a  Eepublican  Member  of 
'mbJy,  is  mortgaged  for  eight  and  one-half  million  dollars, 
more  than  it  would  sell  for  if  all  the  property  was  put  up  at 
iction  to-day  at  public  sale;  Judge  Lynn,  ex-county  judge  of 
Monroe,  a  good  Democratic  friend  of  mine,  and  an  old  school-mate, 
that  at  least  more  than  half  of  the  farms  in  Monroe  county  are 
»rtgaged,  and  half  of  them  for  what  they  would  sell  to-day  at 
iblic  sale;  it  is  safe  to  say  that  all  the  counties  of  western 
York  are  heavily  mortgaged;  I  would  not  be  surprised  if  it 
found  that  fully  one-half  of  the  farms  are  mortgaged,  and 
ips  one-third  of  them  are  mortgaged  for  their  actual  value 
Lay. 

Q.  What  have  yon  to  say  as  to  whether  such  indebtedness  is 
creasing  or  decreasing?  A.  If  you  give  me  a  period  of  ten  years; 
ing  the  last  ten  years  the  mortgage  indebtedness  has  steadily 
rented. 

Q.  Can  you  tell  in  what  ratio?    A.  No,  sir. 

I  Q.  Can  you  give  us  the  comparative,  and  the  proportion  of  each 
ng  on  your  assessment-rolls?  A.  The  assessed  value  of 
il  estate  in  Livingston  county  is  $23,712,650;  th3  assessed 
line  of  personal  property  in  Livingston  county  was  $3,142,567, 


or  about  between  eleven  and  twelve  on  personal  to  eighty -seven 
on  real;  there  is  no  question  in  my  mind  but  that  the  value  of 
personal  property  in  Livingston  county  is  fully  equal  to  chat  cf 
real;  and  then  in  regard  to  the  way  it  is  assessed;  many  of  our 
farms  are  assessed  for  their  full  value,  and  the  railroad  property  i 
is  not.  It  was  proven  that  the  actual  value  of  the  'Delaware, 
Lnekawanna  and  Western  throughout  our  county  was  $80,000 
per  mile,  and  it  was  assessed  at  $20,000  or  one-fourth;  and  what  is 
truo  of  that  road  is  true  of  all  the  others  that  go  through  the 
county,  whereas  the  real  estate  of  the  farmer  is  assessed  at  very 
nearly  its  actual  value,  and  the  real  estate  of  the  railroads  is  not 
assessed  for  more  than  one-fourth. 

Q.  What  is  your  opinion  in  regard  to  the  increase  or  decrease 
in  the  value  of  farm  property  generally  in  your  vicinity  for  the 
past  ten  years?  A.  The  value  of  farm  property  for  the  past  ten 
years  has  steadily  decreased,  not  only  in  our  county  or  township, 
but  throughout  western  New  York,  with  the  exception  of  Steuben 
county,  which,  I  believe,  has,  as  was  stated  by  Mr.  Brundage,  yes- 
terday, increased  in  value  on  account  of  the  grape-growing  inter- 
ests and  the  large  potato  interests  which  have  been  developed 
within  the  last  ten  years;  in  Livingston  county  the  decrease  in 
the  past  ten  years  has  been  fully  forty  per  cent;  I  will  illustrate 
that  by  two  farms  that  have  recently  been  purchased  by  our1 
own  family,  one  of  which  sold  ten  years  ago  at  ninety  dollars 
per  acre,  and  was  purchased  last  season,  although  it  has  been 
greatly  improved,  underdrained  and  fenced,  and  is  in  far  better 
condition  than  then,  at  fifty  dollars  an  acre;  it  is  a  portion  of  the 
farm  known  as  the  famous  Sackett  farm  in  G-enesee  valley 
another  farm,  on  which  I  now  live,  the  owner  was  offered  $120 
an  acre  for  it  eight  years  ago,  and  was  purchased  four  years  ago 
for  seventy-eight  dollars;  another  farm  sold  last  spring;  the  gentle- 
man was  offered  for  it  six  years  ago  $115  per  acre,  and  although 
it  has  beer  greatly  improved  it  was  sold  at  eighty  dollars;  I  could 
go  on  and  give  instances  of  that  sort  by  the  score. 

Q.  Then  you  disagree  with  the  claim  of  the  State  Assessors 
that  in  Livingston  county  lands  are  assessed  only  sixty-eight  per; 
cent  of  the  actual  value?  A.  They  are  assessed  more  than  that; 


35] 

!the  actual  value  of  a  piece  of  property  is  what  it  will  sell  for  in 
the  market. 

Q.  The  standard  is  what  it  would  be  taken  for  in  the  payment 
of  a  just  debt;  in  the  report  of  the  State  Assessors  of  1889,  which 
tactically  represents  the  percentage  which  governs  to-day;  they 
say  it  is  sixty-eight  per  cent :  your  observation  is  different  from 
;hat?  A.  I  believe  it  is  assessed  at  fully  eighty  per  cent  of  the 
actual  value. 

Q.  What  have  you  to  say  as  to  the  revenue  of  the  farming 
ands  in  your  county;  have  they  increased  or  decreased  the  past 
;en  years?  A.  The  revenues  have  steadily  decreased;  one  of  our 
chief  industries  is  that  of  wheat  culture;  my  father,  my  brother 
and  myself,  farming  together  we  raise  200  acres  of  wheat  per 
year,  and  have  done  so  for  the  past  ten  years;  we  keep  a  minute 
account  of  the  cost  of  raising  wheat  and  we  iind  that  the 
revenues  have  steadily  decreased,  until  to-day  wheat  at  seventy 
cents  a  bushel  is  very  unsatisfactory;  I  see  that  the  average 
field  of  wheat  in  the  State  for  the  last  ten  years  is  between 
eleven  and  twelve  bushels  per  acre. 

Q.  That  result  is  due  not  to  taxation  but  the  competition  from 
lie  west?  A.  There  are  many  reasons;  we  have  decreased  the 
price  of  wheat  by  the  destruction  of  1,400,000,000  of  the  people's 
money  by  cremation. 

Q.  What?  A.  Burning  up  the  greenbacks;  demonetization  of 
silver  and  opening  up  the  great  west. 

Q.  WTiat  have  to  say  of  the  laws  which  are  necessary  to  secure 

more  equitable  distribution  of  the  burden  of  government  to 
elieve  farming  lands  from  the  burdens  under  which  they  at 
present  labor?  A.  Farmers  as  a  rule  do  not  realize  that  of  the 
tax  collected  from  their  farms  but  a  small  portion  goes  to  the 
State  government  —  one-fifth  I  think;  but  still  I  have  measures 
>y  which  we  could  spread  the  burden  of  taxation  out  and  do  it 
nore  effectively;  I  am  in  favor  of  making  mortgages  under  the 
aw  real  estate  for  the  purpcse  of  taxation;  that  law  is  in  effect 
in  California  and  is  very  effective;  again,  in  order  to  enforce 
uch  a  law  and  to  tax  all  personal  property,  I  would  have  every 
>ond  or  mortgage  or  a  note  or  any  paper  in  any  such  form  bear 


an  official  stamp,  or  the  value  of  the  paper  would  .be  vitiated, 
unless  it  bore  the  stamp  say  of  the  assessor;  such  a  law  was 
in  force  during  the  recent  unpleasantness  with  our  southern 
brethern;  I  would  have  every  man  his  own  assessor  —  the  listing 
bill,  and  if  any  person  swore  falsely  in  giving  the  value  of  his 
estate,  and  if  it  was  proven  by  any  person  that  such  an  omission 
was  made  intentionally  that  the  property  be  confiscated,  th 
fourths  of  it  to  go  the  State,  and  one-fourth  to  the  party 
parties  that  proved  the  guilt,  of  this  man;  I  have  an  impressi 
that  a  very  few  instances  ;»f  that  sort  would  have  a  salu 
effect  upon  making  men  honest. 

Q.  What  is  the  sentiment  of  your  community  with  regard  taxa- 
tion of  mortgages?  A.  The  general  sentiment  is  that  they  should 
be  taxed;  that  can  be  very  easily  done  also. 

Q.  What  is  it  in  regard  to  the  question  of  adopting  the  listing 
system?  A.  I  have  just  spoken  of  that;  the  general  sentiment 
of  the  thousands  of  farmers  —  I  might  say  here  that  I  have  been 
getting  the  sentiment  of  20,000  farmers  in  western  New  York 
and  we  have  consulted  on  Ihe  question;  we  are  in  favor  of  the 
listing  system,  with  such  regulations  as  I  have  just  stated  here. 

Q.  What  is  the  sentiment  in  your  vicinity  and  in  your  asso- 
ciation of  the  Farmer's  Alliauce  upon  the  question  of  the  allowance 
of  deducting  on  personal  indebtedness?  A.  The  sentiment  is 
among  oar  people  that  every  man  no  matter  whether  he  has  one 
dollar's  worth  of  personal  property  or  f  10,000  should  pay  his  just 
and  equitable  proportion  of  tax  upon  it. 

Q.  What  is  the  sentiment  with  regard  to  the  present  rate 
of  interest  and  the  necessity  of  a  reduction?  A.  We  are  united 
in  favor  of  reducing  the  interest  to  five  per  cent  for  the  reason 
that  wre  believe  it  would  be  beneficial  to  a  great  majority  of 
our  farmers;  it  was  argued  a  few  years  ago  when  the  rate  was 
lowered  from  seven  to  six  per  cent,  that  it  would  drive  capital 
out  of  the  State  and  that  farmers  would  be  unable  to  get  loans, 
but  the  fact  is  that  in  th^  course  of  a  few  years  after  that 
reduction  we  were  fully  as  able  to  obtain  loans  as  before  at 
seven. 


Q.  What  is  the  sentiment  of  taxing  savings  bank  deposits? 
A.  We  are  in  favor  of  it;  it  represents  personal  property. 

Q.  Do  you  think  that  the  raising  of  the  entire  State  tax  by 
[the  State  independent  of  the  counties  would  afford  a  measure 
|of  relief  to  the  agricultural  interests  of  the  State?     A.  It  depends 
great  deal  upon  what  expenses  were  to  be  placed  upon  the 
[counties  in  such  a  case. 

Q.  Assuming  that  all  those  which  are  at  present  borne  by 
ie  State  will  continue  to  be  so  borne  by  the  State9    A.  Assum- 
ig  that,  it  would  be  beneficial  to  the  counties. 
Q.  In  the  event,  then,  of  such  a  scheme  being  devised,  Avhat 
»'oiild  be  the  sentiment  of  your  comnunity  in  regard  to  the  adop- 
ion  of  what  is  known  as  the  local  option  tax  law?    .A.  We  would 
t  be  in  favor  of  that;  I  base  my  reply  upon  this,  because  the 
seal  system  of  this  State  as  we  have  it  now  devised  is  the  most 
.inportant  factor  in  the  education  and  development  of  a  free  and 
itelligent  people,,  and  I  believe  that  all  possible  means  snould 
devised  and  a  liberal  amount  of  money  expended  for  the  further- 
ce  of  our  fiscal  system. 

Q.  You  do  not  understand  my  question;  my  question  has  rela- 
n  simply  to  the  local  option  tax  law  which  allows  such  county 
regulate  for  itself  what  shall  be  subject  to  taxation;  we  do  not 
>pose  to  interfere  with  that  system  or  with  its  development  or 

ress?    A.  I  am  not  in  favor  of  a  local  option  tax  law. 
Q.  What  reasons  are  there  to  sustain  your  views?    A.  Here 
two  counties  adjoining,  Monroe  and  Livingston;  Livingston 
we  will  tax  real  estate  and  personal  property  and  the  other 
we  will  tax  real  estate  alone;  it  would  have  a  tendency 
pur  our  personal  property  to  Monroe  at  the  time  the  assessors 
ent  along. 

Q.  Could  that  be  overcome  by  changing  the  tax  laws  so  that 
le   tax   should  be  laid  upon  personal  property  where   it  was 
ted  without  regard  to  the  residence  of  the  owner?    A,  It 
tight  be. 

Q.  In  that  form,  would  -the  local  option  laws  be  satisfactory 
the  people  in  your  vicinity?    A.  I  would  not  answer  that  before 
45 


giving  it  more  careful  consideration;  we  have  not  discussed  il 
in  our  conventions. 

Q.  What  is  the  sentiment  of  your  community  in  regard  to 
inheritance  tax?    A.  We  are  in  favor  of  its   continuance 
believe  it  should  be  a  graduated  tax. 

Q.  What  is  the  sentiment  in  regard  to  its  being  levied 
upon  real  estate  in  the  same  instance  where  it  is  now  levied  upo:t 
personal  property?  A.  It  should  be  levied  upon  real  estate  as 
well  as  upon  personal;  althoagh  a  farmer,  I  am  in  favor  of  having 
the  same  laws  govern  both  real  and  personal  property. 

Q.  Have  you  any  suggestions  to  make  to  the  committee,  to 
which  your  attention  has  been  called?    A.  I  believe  not. 

By  the  Chairman. 

Q.  Do  you  think  that  the  present  condition  of  the  farmers  froii 
the  standpoint  of  indebtedness  is  attributable  to  the  burden 
of  the  State  taxation?  A.  Only  to  a  very  small  degree  for  th 
simple  reason  that  but  one-fifth  of  the  tax  raised  in  our  count; 
goes  to  the  support  of  the  State. 

Q.  One  of  the  main  purposes  of  this  inquiry,  what,  if  anything 
can  be  done  to  relieve  the  condition  of  the  farmer  by  a  chang 
of  the  tax  law;  now,  have  you  anything  to  suggest  by  way  o 
amendment  as  it  applies  to  the  collection  of  the  tax  for  th« 
general  State  government?  A.  Well,  I  have  offered  my  sug 
gestions  that  all  personal  property,  such  as  bonds,  mortgages 
and  the  like,  should  bear  a  stamp  of  the  assessor  to  be  airy 
value;  that  would  place  every  single  particle  of  personal  property 
of  that  nature  before  the  assessor  which  would  have  to  be  taxed 
more  than  that,  I  would  have,  if  possible,  all  stock  in  stores 
taxed:  now,  in  Rochester,  I  am  familiar  with  a  gentleman,  a 
friend  of  mine,  who  carried  a  stock  in  some  eight  or  ten  stores 
probably  $200,000  on  which  he  pays  not  one  cent  of  tax;  whal 
is  true  in  his  case  is  true  of  a  great  majority  of  the  merchant* 
in  Rochester;  this  personal  property  is  their  capital  that  the? 
are  doinjr  business  on. 


Q.  Suppose  that  property  of  the  character  you  have  just  men- 
tioned was  uniformly  assessed,  do  you  think  that  would  afford  any 
visible  relief  to  the  farmers  of  Livingston  county?  A.  Most 
assuredly. 

Q.  Do  you  think  that  the  condition  of  the  farmer  would  be 
relieved  to  such  an  extent  that  a  year  of  two  hence  he  would  feel 
the  effect  of  it  ?  A.  He  might  feel  the  effect  of  it ;  it  might  reduce 
his  taxes  a  little;  I  had  a  very  interesting  talk  with  Governor 
Flower;  he  said  the  laws  were  all  right  if  they  were  enforced; 
he  said  he  was  going  to  have  a  talk  with  the  comptroller,  and  I 
would  find  that  it  would  be  different. 

Q.  You  can  not  see  anything  that  the  comptroller  2ould  do 
towards  remedying  the  existing  difficulties  in  the  administration 
of  the  tax  laws  in  the  county  of  Livingston?  A.  The  Governor 
said  so;  I  am  quoting  him. 

Q.  I  am  asking  you  now  ?  A.  No ;  I  told  him  I  didn't  have  any 
faith  in  it  at  all,  and  he  said  it  would  be  done. 

Q.  You  mentioned  here  a  little  while  ago  that  the  lands  owned 
by  the  Delaware  and  Lackawanna  railroad  were  assessed,  you 
thought,  for  about  one-fourth  of  their  actual  value?  A.  Yes,  sir. 

Q.  That  is  not  attributable  to  the  present  law,  but  to  the 
method  of  its  execution,  is  it  not  ?  A.  The  method  of  its  execu- 
tion; yes,  sir. 

Q.  Now,  the  fault  lies  entirely  with  the  local  officers  of  the 
towns  of  Livingston  county  in  that  respect?  A.  The  fault  in 
that  regard  lies  with  the  men  that  can  be  bought  and  sold  by 
|  railroad  corporations. 

Q.  How  can  we  remedy  by  legislation  that  unfortunate  condi- 
tion of  affairs?  A.  If  you  will  just  submit  a  paper  to  that  cor- 
poration, and  let  them  swear  to  the  value  of  their  property  in 
I  Livingston  county,  if  it  is  proven  afterwards  by  competent  experts, 
j then  have  one-fourth  of  it  and  the  balance  will  go  to  the  State;  I 
j  have  an  impression  that  railroads  are  not  anxious  to  lose  their 
I  property. 

Q.  It  is  your  opinion,  is  it,  and  you  seem  to  evidence  it,  that 
I  the  average  assessors  in  Livingston  county  are  corrupt?  A.  Xo. 
isir. 

Q.  What  do  you  mean  by  saying  that  «o  Vmg  as  the  laws  are 


350 

executed  by  men  who  can  be  bought  and  sold?  A.  I  know  that 
people  are  influenced  a  great  deal  by  money  throughout  this 
country  in  politics;  don't  you  think  so? 

Q.  No;  it  has  not  been  my  experience  that  the  average  man  can 
be  bought  and  sold?  A.  I  don't  think  so  either;  the  average 
man  is  an  honest  man. 

Q.  Is  that  basis  of  valuation  that  you  have  referred  to,  o 
fourth  on  lands  owned  by  railroad  companies,  uniform  in  yo 
county?  A.  Yes,  sir;  I  believe  that  of  the  actual  value  of  rail- 
roads in  our  county  but  one-fourth  of  their  value  is  assessed;  that 
is  my  opinion. 

Q.  Has  that  subject  agitated  at  all  among  the  people  —  the 
subject  of  the  failure  of  the  assessors  to  perform  their  duties? 
The  assessors  have  performed  their  duties  and  assessed  one 
ticular  railroad  up  to  $64,000  a  mile,  I  think,  and  the  rail 
companies  appealed  from  the  decision  you  know,  or  the  as 
ment,  carry  it  to  law  one  year  to  another,  and  then  at  the  nex 
election  you  will  see  the  board  of  supervisors  elected,  a  majority  of 
them  railroad  men. 

Q.  Then  the  fault  lies  with  the  people  of  your  county?  A.  In 
what  way? 

Q.  For  electing  men  that  are  well  known  railroad  men?  A. 
They  were  not  well  known  railroad  men  before  they  were  elected, 
but  it  panned  out  that  way  when  they  came  to  sit  on  the  board. 

Q.  Do  you  find  that  condition  of  affairs  to  obtain  year  after 
year;  that  men  are  elected  to  office  in  Livingston  county  and 
proved  false  to  the  interests  of  the  pople  they  represent?  A.  In 
some  cases  it  is  so;  there  are  some  men  elected  upon  a  purely 
political  platform,  and  have  no  connection  with  railroads,  and 
when  it  comes  to  treating  a  subject  like  this  in  some  way  or  other 
they  will  vote  in  the  interests  of  the  railroad  and  against  the 
people. 

Q.  Can  you  say  how  the  Legislature  can  remedy  that  unfor- 
tunate condition  of  affairs?  A.  Not  with  the  present  laws;  no,, 
sir. 

Q.  What  suggestion  or  modification  would  you  recommend 
that  would  remedy  that  evil?  A.  I  believe  I  have  briefly  out- 
lined it 


n 


357 

Q.  Other  than  the  listing  system?  A.  I  would  not  suggest  a 
remedy  other  than  that;  let  them  swear  to  the  value  of  their 
property;  let  their  books  be  opened  —  what  it  cost  to  build  it; 
then  compare  it  with  what  the  road  is  worth ;  then  confiscate  part 
of  it  if  they  have  sworn  falsely. 

Q.  You  suggest  a  rather  severe  penalty?    A.  Yes,  sir. 

Q.  Under  the  proposed  listing  system,  viz.,  that  of  confiscation? 
A.  Yes,  sir. 

Q.  Have  you  given  the  question  of  such  a  radical  change  as 
that  serious  thought?  A.  I  have. 

Q.  And  you  really  believe  that  the  penalty  for  that  ougfit  to  be 
the  confiscation  of  the  property  covered  by  the  statement?  A.  I 
do;  for  the  reason  that  the  tune  has  come  when  the  owners  of 
personal  property  take  advantage  of  the  present  law  and  evade 
the  collection  of  tax  upon  it  to  such  an  extent,  that  the  time  has 
come  when  radical  measures  must  be  employed  to  collect  taxes 
upon  that  property. 

Q.  Judging  from  the  experience  of  the  past,  is  it  your  opinion 
that  men  can  be  made  honest  by  operation  of  law?  A.  Not 
honest  in  their  hearts,  but  honest  in  their  outward  actions  by  fear 
of  the  property  being  taken  away  from  them. 

Q.  You  think  that  to  take  a  man's  property  would  have  more 
effect  in  making  him  comply  with  the  law  than  the  risk  of  losing 
'his  personal  liberty?  A.  Yes,  sir;  certainly;  lots  of  men  will 
lose  their  liberty  for  a  year  or  two  for  the  sake  of  making  a  few 
thousand  dollars;  it  is  no  disgi«ace  to  be  a  jail  bird  if  he  is  a 
big  thief;  it  is  an  honor;  look  at  them  in  Canada;  they  are  high 
mucks  mucks ;  but  take  their  property  away  that  will  tend  to  make 
them  honest  outwardly. 

Q.  Don't  you  think  they  would  be  willing  to  run  the  same  risk 
of  losing  their  property  that  they  would  of  losing  their  liberty? 
A.  No,  sir;  I  will  admit  that  my  suggestion  is  a  drastic  one, 
but  I  think  it  is  required. 

Q.  I  did  not  notice  whether  you  expressed  an  opinion  as  to 
the  wisdom  of  the  proposition  to  relieve  real  estate  from  taxation 
for  State  purposes?  A.  I  had  not  given  that  serious  thought,  but 


the  question  as  put  to  be  by  the  judge  was  with  the  assumption 
that  the  State  funds  will  still  be  used  in  taking  care  of  all  the 
different  objects  that  they  are  at  present^  and  I -would  be  in  favor 
of  it;  I  might  change  my  mind  by  looking  into  it  more;  if  there 
was  no  tax  levied  upon  real  estate,  and  the  tax  levied  upon  cor- 
porations by  the  State,  and  still  the  school  moneys  be  distributed 
throughout  the  counties  as  they  are  it  would  seem  on  the  face 
of  it  very  favorable  to  real  estate  owners;  but  still  I  am  willing 
to  be  an  advocate  of  any  law  that  will  be  for  the  welfare  of  a 
majority  of  our  people,  whether  they  be  owners  of  real  estate  or 
personal  property,  and  I  have  great  hopes  that  this  committee  is 
going  to  get  some  feasible  measure  into  shape  that  will  be  for  the 
benefit  of  the  many  and  not  for  the  few. 

Q.  Have  you  made  any  investigation  or  inquiry  with  a  view 
of  ascertaining  what  per  cent  of  the  taxes  for  State  government 
purposes  are  paid  by  the  agricultural  interests  of  the  State? 
A.  I  do  not  just  remember  the  statistics,  but  I  believe  that  in 
the  cities  of  New  York,  Brooklyn  and  Buffalo  —  I  can  not  give 
you  the  figures;  I  can  not  think  of  them  now. 

Q.  About  sixty-five  per  cent?    A.  Something  like  that  I  believe. 

Q.  Haven't  you  noticed  that  it  was  reported  that  the  agricul- 
tural lands  of  the  State  only  paid  about  eight  and  one-half  per 
cent  of  the  total  taxes  for  the  State  purposes?  A.  I  had  not 
seen  that. 

Q  Now,  is  it  not  a  fact  that  the  burden  of  taxation  that  falls 
upon  the  fanner  is  largely  local?  A.  No,  sir;  the  fact  is  that 
the  farmers  —  the  consumers  —  throughout  this  State  pay  all 
the  taxes  —  the  common  people;  for  this  reason  you  tax  a  farmer 
upon  his  real  estate;  you  tax  him  upon  his  personal  property  that 
you  can  see,  his  horses  and  cows,  and  so  forth,  and  you  go  and  tax 
a  railroad  company,  a  merchant  or  commission  man,  or  anything 
as  that,  and  the  prices  of  his  commodities  are  raised,  so  that  they 
all  come  out  of  the  people. 

Q.  Directly  they  are  paid  by  the  owner  of  the  property?  A. 
Yes,  sir;  but  indirectly. by  the  common  people;  they  pay  all  taxes. 

(2-  Are  you  assessed  for  any  personal  property  in  Livingston 
county?  A.  No,  sir. 


Q.  II ow  many  farms  do  yon  ownj?  A.  I  don't  own  any  myself; 
!  I  live  on  a  farm  that  belorgs  to  my  father. 

Q.  Your  father  is  the  owner  of  the  farm  that  you  live  on?  A. 
Yes,  sir;  my  father  owns  about  1,000  acres  in  the  county  of 
Livingston. 

Q.  How  many  farms  altogether  in  that  thousand  acres?  A.  Four 
i  different  farms;  it  is  a  consolidation  of  really  seven  farms  in  four. 

Q.  Do  you  know  whether  your  father  pays  any  personal  tax  for 
the  stock  and  implements  on  those  farms?  A.  Yes,  sir;  I  pay 
taxes  upon  the  farm  I  reside  on,  and  my  brother  on  the  farm  he 
resides  on,  and  my  father  pays  the  balance. 

Q.  Your  father  is  assessed  for  the  land  and  you  are  assessed 
for  the  stock  on  the  farm?  A.  There  is  no  assessment  upon  my 
stock  on  my  own  farm;  my  father  is  assessed  but  I  have  forgotten 
the  amount  of  the  personal  tax. 

Q.  Is  it  not  a  fact  that  our  local  assessors  in  making  up  their 
estimate  of  the  valuation  of  a  farm  estimate  it  very  largely  upon 
the  amount  of  stock  it  will  carry?  A.  It  is  not  so  in  our  county; 
we  are  not  dairy  people. 

Q.  You  say  that  you  are  not  assessed  for  any  of  the  stock  on 
your  farm?  A.  No,  sir;  I  am  not. 

Q.  Now,  under  the  present  law  it  is  assessable,  is  it.  not?  A. 
Yes,  sir. 

Q.  Have  you  made  any  complaint  to  the  local  assessors  that 
they  hav<>  not  performed  their  duty  in  failing  to  assess  you?  A. 
No,  sir;  I  have  not;  I  told  them  at  the  time  they  vere  at  my 
farm  this  summer;  they  just  simply  drove  through  there  and 
talked  a  few  minutes;  I  says:  "1  suppose  you  have  got  all  those 
people's  farms  assessed,  haven't  you,  and  all  their  stock?"  They 
said :  •'•'  Yes,  we  have  not  got  their  stock;  do  you  owe  any  money? " 
I  says :  "  Certainly,  a  few  hundred  dollars ;  I  don't  understand 
that  is  an  excuse  for  assessment  on  personal  property ; "  they 
seemed  to  think  so;  my  brother  has  been  fanning  longer  than  1 
have  and  has  accumulated  more  personal  property  around  him 
and  he  is  assessed  upon  his  personal  property;  I. suppose  because  I 
was  comparatively  young  in  the  fanning  business  ihey  did  not 


assess  me,  I  told  them  at  the  time  I  thought  it  was  no  excuse 
because  I  owed  a  few  hundred  dollars. 

Q.  After  they  had  seen  you  and  given  notice  that  the  assessment- 
roll  \vas  complete  and  open  for  inspection,  did  you  go  to  examine 
the  roll  and  see  if  you  were  assessed(?  A.  Not  until  the  other  day. 

Q.  You  have  made  no  complaint  that  the  assessors  have  not 
performed  their  duty?  A.  No,  sir. 

Q.  How  many  years  have  you  been  paying  taxes  on  this  farm? 
A.  Five  years. 

Q.  You  have  not  been  assessed  for  any  personal  property  during 
that  time?  A.  No,  sir. 

Q.  Yet  you  have  made  no  effort  to  make  them  perform  their 
duty  by  assessing  you  on  personal  property?  A.  No,  sir;  just  on 
the  principle  if  they  did  not  assess  other  people  they  should 
not  assess  me. 

Q.  Did  you  never  stop  to  consider  that  you  could  compel  those 
officers  to  perform  their  duties?  A.  I  suppose  I  could  go  and 
swear  I  was  worth  so  much  personal  property  and  they  would 
assess  me. 

Q.  Recognizing  the  fact  that  the  assessment-roll  was  incomplete, 
did  it  ever  occur  to  you  that  you  might  have  instituted  some 
proceedings  to  make  the  assessment-roll  complete?  A.  By  swear- 
ing to  my  own  value  of  the  personal  property. 

Q.  Yes,  sir;  and  that  of  others?  A.  It  is  a  question  under  the 
present  laws  whether  you  can  prove  that  other  people  have  per- 
sonal property  if  they  swear  they  have  not. 

Q.  What  effort  have  you  made  to  compel  the  assessors  of  your 
town  to  discharge  their  duty  under  the  law?  A.  I  have  not 
made  any  fo?  the  reason  that  I  believed  the  law  is  so  inefficient 
that  any  attempt  would  prove  a  failure. 

Q.  You  understand  the  law  and  what  it  provides  for  as  to 
personal  property?  A.  Yes,  sir;  to  a  certain  extent. 

Q.  It  has  not  been  complied  with  in  your  case?    A.  No,  sir. 

Q.  Have  you  made  any  effort  to  have  it  complied  with?  A. 
I  have  not. 

Q.  Then  the  fault  in  that  case  would  seem  to  be  with  the  execu- 
tion of  the  law  and  not  the  jaw  itself?  A.  Yes,  sir. 


361 

Q.  Don't  you  believe  if  you  had  gone  to  the  assessors  and 
I  insisted  upon  your  assessing  your  personal  property  they  would 
1  have  done  it?  A.  I  think  they  would;  Mr.  Flower  talked  just  as 

•  strongly  in  favor  of  assessing  personal  property  as  I  did. 

By  Mr.  Hamilton. 

Q.  Do  you  know  of  any  effort  made  to  raise  the  valuation  of 

•  the  Delaware,  Lackawanna  and  Western's  property  to  its  true 

•  standard?    A.  I  said  that  the  assessors  did  assess  it  f 64,000  a 
imile  and  they  appealed  from  the  assessment  and  it  was  put 
•afterward  back  down  to  I  think  $20,000. 

By  the  Chairman. 

Q.  By   appeals   to   the   c-uirts?    A.  Either   the   courts   or  the 

•  Stale  Bojird  of  Assessors;  I  have  forgotten  which,  it  was  a  year 

•  or  two  ago,  and  the  exact  facts  have  slipped  my  memory. 

Q.  Can  you  tell  the  committee  how  they  arrived  at  the  value 

•  of  this  railroad  land?    A.  "No;  I  can  not  tell  you  how  they  arrived 

•  at  it,  for  that  reason  I  would  be  in  favor  of  having  a  railroad 

•  company  swear  to  the  value  of  the  land  themselves,  with  the 

•  penalties  attached  as  1  havo  stated. 

Q.  Now,  after  the  courts  had  decided  that  the  lands  were 

•  properly   assessable   at   $20,000   a   mile   were  you   still    of   the1 

•  opinion  that  the  assessment  was  unjust?    A.  I  have  forgotten 
•whether  they  appealed  to  the  courts  or  to  the  assessors  of  the 

•  State. 

Q.  The  proceeding  is  by  writ  of  certiorari  in  the  Supreme  Court; 
I  now,  in  view  of  the  fact  that  the  court  decided  that  the  claim 
lof  the  railroad  that  the  land  should  be  assessed  at  $20,000  a 
imile  was  sustained,  are  you  still  of  the  opinion  that  the  assess- 

•  ment  was  wrong?    A.  I  am,  most  assuredly. 

Q.  Do  you  think  the  railroads  controlled  the  judges  as  well 

•  as  the  assessors?    A.  I  would  hate,  you  know,  to  state  that  the 
I!  railroads  controlled  the  judges  as  well  as  the  assessors,  but  I 

I  have  an  impression  to-day  (hat  the  railroad  control  the  entire 

I 1  country  and  therefore  I  a-u  v<jry  much  in  favor  of  government 


362 

ownership  of  railroads  and  having  railroads  under  the  ownership 
or  direction  of  the  government,  the  same  as  in  Australia,  New 
Zealand,  Switzerland  and  Austro-Hungary ;  in  Switzerland  when 
you  pay  three  cents  for  a  ride  on  the  street  cars  you  are  contri- 
buting to  the  support  of  each  child  in  the  schools. 

Q.  Why  not  have  the  government  control  everything  that 
obtains  a  franchise;  why  pick  out  railroads  and  telegraph  com- 
panies? A.  I  would  say  railroads,  telegraph  companies  and! 
telephone  systems;  for  instance,  our  postmaster-general  stated 
once  that  he  could  build  a  line  of  telegraph  connecting  every 
post-office  ancl  send  twenty-live  words  for  ten  cents  and  fifty  or 
100  words  for  twenty-five  cents  and  make  a  profit  at  that. 

Q.  I  presume  the  government  could  run  farms  and  compete 
with  the  farmers;  why  not  go  as  far  as  that;  if  it  is  good  in  one 
case  why  not  in  all?  A.  Because  those  companies  obtain  their 
charters  under  the  supposition  that  it  was  for  the  welfare  of  the 
public;  they  have  the  right  of  eminent  domain  given  to  them  to 
acquire  property  and  if  those  corporations  are  started  for  the  pur- 
pose of  promoting  public  welfare  they  should  be  managed  and 
controlled  by  the  government',  it  is  the  people  for  whom  the  corpo- 
rations are  supposed  to  work  and  labor  and  not  for  themselves; 
then  I  speak  further  in  regarl  to  the  plan,  knowing  there  are  a  half 
a  dozen  different  countries  where  the  railroads  are  owned  by  the 
^overameiit ;  take  Belgium,  for  instance,  there  is  a  Astern  whereby 
you  can  ride  from  two  to  six  miles  out  of  Brussels  for  two  rents; 
from  six  to  twelve  miles  for  four  cents,  and  those  rates  have  been- 
a  very  paying  investment;  in  Australia,  a  thousand-mile  coupon?! 
for  six  dollars  and  eighty-one  cents;  the  railroads,  after  paying 
operating  expenses,  turn  in  the  excess  of  revenue  to  the  govern- 
ment: the  rates  of  New  Zealand  are  quite  low,  not  quite  as  low 
as  those  of  Australia,  as  I  remember,  and  yet  those  are  very 
profitable. 

Q.  Do  you  think  that  the  fanners  of  the  countries  to  which 
you  referred  are  in  a  better  condition,  generally,  than  the  Ameri- 
can farmer?  A.  1  do  not. 


363 

J*y  Mr.  Stranahan. 

I  Q.  Have  yon  been  in  the  habit  of  appearing  before  the  legis- 
lative committees  on  those  subjects?  A.  T  appeared  before  the 
loimmttee  on  general  laws  last  year  on  the  legal  rate  of  interest. 
I  Q.  Have  you  appeared  before  the  committee  on  taxes  relative 
o  the  laws  pending?  A.  I  have  not;  no  sir. 

By  the  Chairman. 

I  Q.  Have  yon,  in  connection  with  the  amount  of  tax  paid  by 
•he  agricultural  interest  of  the  State,  taken  into  consideration  the 
•umber  of  appropriations  that  are  made  by  the  Legislature  for 
fcrming  interests?  A.  Such  as  the  appropriation  for  the  State 
lair  and  the  experiment  station,  and  all  those? 
I  Q.  Yes,  sir?  A.  Yes,  sir;  those  are -very  good  things,  but  as 
§  n  offset  to  that  we  have  got  a  building  down  at  Albany  that 
lost  |20,000,000  appropriated  by  the  State  Legislature,  part  of 
J/hich  was  paid  by  the  farmers  for  building  a  monument  to  the 
fclossal  folly  of  this  State. 

r  Q.  You  don't  think  that  the  people  of  the  State  of  New  York 
thould  have  such  a  capitol?    A.  I  hate  to  say  it. 

Q.  Don't  you  recall  when  that  was  started  that  the  farmers 
lontrolled  the  Legislature,  and  that  it  was  their  votes  that  put 
•  there?  A.  On  a  f 4,000,000  basis. 

I  Q.  In  my  seven  years'  experience,  the  farmers'  vote  for  every 
I  ppropriation?    A.  It  is  very  strange;  I  don't  think  the  fanner 
lirho  represented  me  voted  for  it. 
|   Q.  Who  is  that?    A.  Koberts. 

i  William  Sweet,  called  as  a  witness,  being  duly  sworn,  testified 
III  follows: 

P»y  Mr.  Hamilton. 

Q.  You  reside  in  the  city  of  Syracuse?    A.  Yes,  sir. 
Q.  And  your  business?    A.  Steel  maker. 

Q.  How  long  have  you   been  engaged  in   that  business?     A. 
1863. 


364 

Q.  You  employ  a  number  of  hands  in  your  business?  A.  Yes,] 
SIP. 

Q.  Have  you  given  any  attention  to  the  question  of  taxation^ 
A.  Very  little. 

Q.  Have  you  conversed  with  people  in  your  employ,  or  pec»p|jj 
of  your  acquaintance  in  your  vicinity  with  regard  to  that  qu< 
tion?    A.  Very  little,  indeed. 

Q.  Have  you  any  suggestions  to  offer  the  committee  in 
to  this  question  under  consideration?  'A.  I  can  not  say  that  ]| 
have  very  much;  had  I  known  for  a  week  or  two  what  was  wanted 
I  should  have  liked  to  have  read  up  on  the  question  and  prepared 
myself  to  answer  all  questions  with  a  good  deal  of  satisfactioij 
I  think  to  myself,  if  not  to  you;  I  only  knew  abonr  this  the 
before  yesterday  afternoon,  and  really  don't  know  or  dido't  kno^l 
what  was  wanted  or  expected;  I  should  have  very  much  liked 
to  have  posted  myself  to  have  answered  yon  intelligently;  mj 
ideas  of  taxation  would  be  that  it  should  be  listed,  have  every) 
man  assess  himself;  that  is  a  broad  statement  of  it. 

By  Mr.  Guenther. 

Q.  You  favor  the  listing  system?    A.  I  don't  know  what 
call  it;  every  man  should  have  a  ticket  sent  to  him,  assess  hii 
self  and  send  it  in. 

Q.  And  swear  to  it?    A.  Certainly. 

Q.  You  are  in  the  steel  business?    A.  Yes,  sir. 

Q.  You  have  a  largie  capital  on  which  you  do  your  business'1! 
A.  Yes,  sir. 

Q.  As  a  business  man  you  know  it  to  be  a  fact  that  a  goocj 
many  people  do  their  business  entirely  on  paper;  what  would  lx< 
the  effect  if  a,  man  had  to  list  himself,  showing  his  indebtedness1) 
which  would  be  very  near  the  amount  of  capital  involved;  wouldn* 
that  drive  him  to  the  wall?  A.  Not  necessarily,  you  need  not  pub 
lish  it 

Q.  If  he  makes  that  and  files  it  with  the  assessors  anybody 
can  see  it?  A.  If  the  law  was  made  so;  the  assessors  conl<? 
see. 


365 

I  Q.  You  would  make  them  sole  judge  then?    A.  Not  neces- 
larUy,  that  would  depend  upon  the  system  which  you  adopt. 
I  Q.  As  a  business  man  you  would  not  think  it  a  good  idea  to 
lave  every  man's  indebtedness  known?    A.  Yes,  sir;  I  do. 
I  Q.  Would  you  be  just  as  apt  to  loan  a  man  $10,000  if  you  knew 
e  had  a  capital  of  $10,000  and  owed  $10,000?    A.  Every  tub 
Jhould  stand  on  its  own  bottom;  I  will  tell  you  what  I  do  when 
pie  assessors  come;  there  is  the  clerk,  there  is  the  bookkeeper  and 
tere  are  the  books;  there  is  not  any  question  that  you  can  ask 
that  bookkeeper  but  what  he  is  bound  to  answer,  and  answer 
thfully;   that  is  the  bottom  which  I  have  always  stood  on;   I 
.e  to  Syracuse  in  1858  with  $350,  and  I  now  do  a  business  of 
0,000  a  year. 

By  the  Chairman. 

Q.  You  take  quite  an  interest  in  the  affairs  of  the  farmers  do 
not?    A.  Yes,  sir;  I  have  a  brother  up  here  on  a  farm;  when 
can  not  get  along  I  send  him  some  money; 

By  Mr.  Guenther. 
Q.  You  do  a  business  of  $800,000?    A.  Yes>  sir;  on  $200,000 

Q.  Can  not  you  tell  just  how  some  other  man  can  do  the  same 
Business?    A.  Yes,  sir;    I  can;    I  have  told  it  to  a  great  many 
mng  men;   commence  to  save;  the  first  dime  you  get  put  it  in 
savings  bank;  when  you  get  another  put  that  there. 

By  the  Chairman. 

Q.  Have  you  given  such  attention  to  the  interests  of  the  farmer 
you  are  able  to  say  anything  to  the  committee  as  to  whether 
is  unjustily  burdened  with  the  expenses  of  government?    A. 
bte  government? 
Q.  Yes,  sir.    A.  I  say  most  emphatically  he  is  not;  a  year  ago  last 
ier  I  was  president  of  the  road  association;  I  used  to  say  to 
tie  farmers  in  undertaking  to  get  through  the  Richardson  road  bill 
if  that  became  a  law  that  for  every  dollar  expended  ninety- 
cents  would  be  paid  by  the  cities,  and  the  farmers  would  pay 


eight  cents  or  eight  and  a  half  cents  of  it,  and  they  were  the  one* 
that  «ould  not  afford  to  be  against  the  Richardson  road  bill;  il 
should  have  been  a  law;  all  the  money  could  have  been  earned 
and  paid  back  to  the  farmers  by  working  on  the  roads. 

Q.  Do  you  believe  the  legal  rate  of  interest  should  be  reducec 
from  six  to  five  per  cent?  A.  I  am  a  borrower  of  money,  and  ai 
a  natural  inference  I  should  say  yes,  but  as  a  broad  principle -3 
hardly  think  I  should  say  so;  I  think  six  per  cent  is  about  right 

Q.  For  the  general  good  would  you  say  no?  A.  I  would  &&) 
no;  I  borrow  large  amounts  of  money  —  all  my  credit  can  stan< 
sometimes. 

Q.  Do  you  believe  mortgages  ought  to  be  taxed?  A.  Yes,  sir 
there  is  no  capital  except  a  man's  brains;  the  money  is  th<| 
savings  of  capital,  and  all  savings  should  be  taxed  an  equal  portion! 
of  taxation;  if  I  and  my  brother  had  been  left  by  our  father  wlti 
$10,000  and  a  farm  worth  $10,000  and  he  would  say  "'You  take  tb 
$10,000  and  I  take  the  farm;"  I  can  not  see  any  reason  wh; 
$10,000  should  not  pay  taxes  as  well  as  the  farm. 

Q.  If  you  loaned  him  that  money  and  took  a  mortgage,  there  i 
no  reason  why  that  mortgage  should  not  be  taxed?  A.  Ther- 
is  no  reason;  I  am  situated  just  as  I  am  talking;  I  left  the  fara 
and  he  is  on  it;  I  have  been  pegging  away  and  he  has  been; 
think  he  has  worked  harder  physically  than  I  have,  but  I  hav 
worked  hard  with  this  thing,  and  there  is  very  little  hair  on  i 
now. 

Q.  While  producing  good  results  for  yourself  haven't  you  als* 
done  more  for  the  general  good  than  he  has?  A.  I  am  a  littl 
modest  on  that;  let  somebody  else  tell  that. 

Q.  Take  two  other  men  similarly  situated?  A.  I  supposa  th. 
world  would  say :  Yes ;  I  have  just  done  all  I  could. 

Q.  You  have  been  a  public  benefactor  with  the  great  busines 
that  you  have  built  up  here,  which  has  been  a  public  benefit,  an 
to  a  greater  extent  than  from  the  standpoint  of  taxation;  don' 
you  think  so?  A.  I  think  so. 

Q.  As  a  practical  proposition,  what  would  you  say  to  the  advis* 
bility  of  the  amendment  of  the  statute  which  would  raise  tb 


367 

entire  expense  of  State  government  independent  of  real  estate 
from    the    bonded    indebtedness    of    corporations    and    coll  at  nil 
eritance  laws?    A.  That  would  be  in  the  same  road  that  I 
I  have   been  traveling  —  bonded  indebtedness;   if   a  corporation 
Jissues  bonds,  they  are  usually  bought  by  wealthy  people,  and 
]there  is  no  reason  why  they  should  not  pay  some  tax  upon  them, 
d  if  through  that  means  the  State  taxes  could  be  all  raised,  1 
.ould  say,  do  it  by  all  means. 

Q.  If  it  could  be  raised  on  a  tax  of  less  than  half  a  mill,  you 
ould  think  it  was  onerous?    A.  No,  sir;  I  think  it  would  be 
ust. 

Q.  Don't  you  think  it  would  be  a  long  step  in  the  direction  of 
lution  of  those  questions  if  the  people  could  be  given  to  under- 
nd  that  all  the  taxes  they  had  to  raise  at  home  was  for  the 
ocal  government?    A.  I  should  think  so;  they  would  begin  to 
lize  then  what  the  taxes  were. 
Q.  And  that  economy  began  at  home  ?    A.  Yes,  sir. 
Q.  As  a  manufacturer,  what  would  be  your  views  as  to  the 
ption  law,  in  the  event  that  the  taxes  raised  by  a  county  would 
applied  solely  to  its  own  expenses?    A.  I  have  not  given  that 
y  study,  but  it  seems  to  me  it  would  make  a  kind  of  con- 
omeration  of  business  in  the  State;  on  the  moment,  I  would  say 
to  that;  there  had  better  be  a  system;  if  the  State  tax  was 
ised  by  other  means  then  there  should  be  a  general  system 
t  would  have  a  proper  supervision  by  the  comptroller. 
Q.  Would  not  the  other  plan  give  the  localities  that  perhaps 
not  have  natural   advantages,  by  relieving  manufacturing 
blishments  from  taxation,  it   attracts  such   establishments 
them?    A.  In  some  places  it  might. 

Q.  Would  not  that  operate  directly  upon  your  own  inter .?sts; 
cuse  might  encourage  manufacturers  either  by  levying  no 
or  putting  a  small  specific  tax?    A.  It  might,  of  course; 
'.  there  are  a  good  many  people  that  have  written  to  our  association 
and  wanted  to  know  if  we  would  not  give  them  some  money;  I 
think  two  have  come  here  by  giving  them  land  but  it  would  not 


368 

make  much  difference  one  way  or  another;  if  so  much  taxes 
ought  to  be  raised  in  this  county  and  there  is  property  exempt, 
others  would  have  to  pay  it  just  the  same;  we  might  just  as  well 
give  them  five  dollars  apiece. 

By  Mr.  Gifford. 

Q.  Wouldn't  it  haVe  the  effect  to  centralize  capital  at  the* 
expense  of  the  rural  districts?    A.  Usually  the  supervisor  of  the 
towns  would  have  to  look  out  for  that;  now  we  have  got  more 
supervisors  than  they  have  in  the  towns;  we  have  nineteen  now; 
I  don't  know  whether  that  would  work  or  .not;  it  seems  to  me  it : 
would  create  controversies. 

Q.  Suppose  that  the  city  of  New  York  exempted  personal  prop- 
erty from  taxation,  and  the  board  of  suprvisors  in  counties  adjoin- 
ing had  the  right  to  assess  personal  property  or  exempt  it,  what  * 
would  be  the  effect  then,  would  it  not  force  the  board  of  super- 
visors in  those  adjoining  counties  to  follow  suit?    A.  I  think 
it  would.  I 

By  the  Chairman. 

Q.  Wouldn't  that  seem  to  be  an  argument  in  favor  of  exempting 
property?  A.  It  would  to  a  certain  extent. 

Q.  Can  you  give  any  reason  why  you  think  personal  pr>perty 
ought  to  be  exempted  ?  A.  No,  sir;  I  take  the  broad  ground 
that  everything  should  pay  an  equal  amount  of  taxation,  even  to 
railroads. 

Q.  If  properly  protected  by  law  they  ought  to  pay  for  that?  A. 
I  should  think  so. 

A.  P.  Potter,  called  as  a  witness,  being  duly  sworn,  tes tided  as 
follows : 

By  Mr.  Hamilton. 

Q.  You  reside  in  Syracuse?    A.  I  do. 
Q.  What  is  your  business?    A.  Printer. 


369 

Q.  How  long  have  you  been  engaged  in  the  business?  A. 
Twent3'-five  years. 

Q.  Have  you  given  attention  and  investigated  the  subject  of 
taxation?  A.  I  have. 

Q.  Examined  it  in  its  various  details?    A.  I  think  I  have. 

Q.  And  also  discussed  it  with  the  people  of  the  city?  A» 
Very  largely  with  certain  classes  of  them. 

Q.  With  what  classes?    A.  Working  classes  mostly. 

Q.  Are  you  a  member  of  the  various  societies?  A.  The  Federa- 
tion of  Labor,  the  Knights  of  Labor,  and  also  a  member  of  the 
Grange. 

Q.  In  your  meetings  have  you  heard  those  questions  dis- 
cussed and  taken  part  in  the  discussion?  A.  Very  extensively 
during  the  past  two  years. 

Q.  What  have  you  to  say  as  to  the  propriety  of  modifying  the 
present  tax  laws  so  far  as  they  affect  the  agricultural  and  other 
interests  of  the  State?  A.  I  think  they  should  be  modified. 

Q.  In  what  respect?  A.  To  bring  about  a  just  basis  of  taxa- 
tion—  to  find  a  just  basis. 

Q.  In  what  way  do  you  suggest  those  modifications?  A.  I 
think  taxes  in  the  place  should  be  taken  from  personal  property. 

Q.  You  think  personal  property  should  be  relieved  from  taxa- 
tion? A.  Entirely. 

Q.  Then  how  would  you  receive  the  necessary  revenue  for  the 
support  of  the  government?  A.  On  the  unimproved  value  of 
land. 

Q.  You  are  an  advocate  then  of  what  is  known  as  the  Single 
Tax  system?  A.  I  am. 

Q.  What  do  you  say  as  TO  whether  capital  has  been  or  is 
being  driven  from  the  State  by  restrictions  affecting  corpora- 
tions? A.  Any  such  restrictions  I  think  would  result  that  way, 
undoubtedly  so. 

Q.  Then  as  a  necessary  result  of  your  views  you  are  opposed 
to  the  taxation  of  mortgages  are  you  not?    A.  Yes,  sir;  I  would 
be  opposed  to  the  taxation  of  mortgages. 
47 


Q.  Is  that  view  generally  entertained  by  members  of  those 
organizations  to  which  you  belong?  A.  No,  sir;  I  don't  think 
they  have  any  view  on  the  subject  at  all;  there  are  a  great  many 
of  them  talking  of  it  and  inclining  in  that  direction. 

Q.  That  has  been  recent?  A.  It  has  been  going  on  for  two 
years;  many  are  changing  Ibeir  opinion  upon  it  and  many  have 
>no  opinions  upon  it  at  all. 

Q.  Have  you  discussed  or  heard  discussed  the  question  ot^ 
raising  the  entire  State  tax  by  a  specific  tax  other  than  by  coun- 
ties? A.  I  do  not  exactly  understand  your  question. 

Q.  That  the  entire  tax  for  State  purposes  should  be  raised 
by  the  State  by  a  specific  tax?  A.  On  what? 

Q.  Such  as  the  inheritance  tax,  corporation  tax,  bonded  indebt- 
edness of  corporations  and  the  like,  and  relieving  the  counties 
from  all  necessity  for  contribution  for  that  purpose?  A.  You 
reach  a  conclusion  by  your  question  which  I  should  question;  £; 
would  question  whether  that  would  relieve  the  counties  from 
necessity  of  contribution. 

Q.  I   mean   direct?    A.  It   might   relieve   directly,   but   the 
would  be  an  indirect   construction,  which   would  be   the 
thing. 

Q.  If  the  tax  was  laid  specifically  upon  inheritances?    A. 
would  be  raised  by  people  in  the  counties. 

Q.  Have  you  considered  what  is  known  as  the  local  option 
law?    A.  Yes,  sir. 

Q.  What   are   your    views"    A.  That  local   option   should 
permitted  in  any  locality. 

Q.  Have  you  any  other  suggestion  to  make  to  the  commil 
in  regard  to  this  question  of  taxation?  A.  I  think  that  local  opl 
should  be  made  a  law ;  that  localities  should  be  permitted  to 
how  they  shall  raise  their  taxes  provided  they  raise  enough;  tl 
the  amount  that  is  apportioned  to  them  shall  be  guaranteed, 
the  mariner  in  which  it  is  to  be  raised  I  should  leave  to  c 
county  on  this  ground,  that  these  new  systems  of  taxation  would! 
then  be  tried  and  the  result  good  or  bad  could  be  definitely  set- j 
tied  before  it  was  tried  by  the  State  or  larger  divisions;  it  would 


371 

give  opportunity  for  the  trial  of  such  a  system,  which  ^eenis  to  be 
needed;  the  present  system  is  undoubtedly  wrong;  the  taxation 
here  shows  it;  I  examined  the  books  before  I  came  here,  and  I 
found  that  there  is  $52,000  less  personal  property  than  last  year; 
;he  assessors'  books  for  1891  show  that  personal  prope.rty  was 
essed  $3,380,389;  in  1892  it  is  less  by  over  f 52,000,  or 

.32^,296,  when  it  can  not  be  possible  that  the  personal  property 
as  decreased;  it  has  largely  increased.  People  conceal  their 

rsonal  property;  they  swear  it  off;  I  think  the  amount  of  per- 

>nal  property  on  the  assessors'  books  will  be  found  to  increase 

ch   Tear. 

]>y  tlie  Chairman. 

Q  Is  it  your  opinion  that  the  average  citizen  is  opposed  to  the 
^dea  of  taxing  personal  property?    A.  No,  sir;  I  don't  think  he 
i;  I  don't  think  the  average  citizen  has  inquired  regarding  it. 
Q.  Do  you  think  there  is  any  sympathy  with  the  average  holder 
>f  personal  property  with  the  law  which  calls  for  the  taxation  of 
ich  property?    A.  Well,  the  average  holder  —  I  should  say  that 
[;h.e  majority  of  the  holders  don't  know  much  about  it;  but  I 
should  &ay  there  is  a  very  large  growing  sentiment  in  favor  of 
fhe  abolition  of  taxation  of  personal  property  that  is  increasing 
•h  j  ear ;  I  think  there  was  an  organization  here  among  business 
a  year  or  so  ago  looking  towards  that  end;  and  then  this 
(tort  to  get  the  listing  law,  that  was  fought  extensively  by  the 
lerchants  of  this  city. 

Q.  Are  you  in  favor  of  reducing  the  legal  rate  of  interest  from 
LX  to  five,  per  cent?    A.  Under  present  conditions  I  don't  see 
ut  that  might  help  some;  I  don't  see  why  there  should  be  a  legal 
te  of  interest  at  all;  I  would  be  in  favor  of  leaving  it  to  the 
grower  and  lender. 

James  Carroll,  called  as  a  witness,  being  duly  sworn,  testified 
follows: 
By  Mr.  Hamilton. 

l£.  You  have  been  a  member  of  the  board  of  assessors  of  the 
of  Syracuse?    A.  Yes,  sir. 


372 

Q.  For  how  long?    A.  Two  years. 

Q.  What  is  your  business?    A.  Mason  and  builder. 

Q.  What  have  you  to  say  as  to  the  propriety  of  modifying  the 
present  laws  in  relation  to  taxation,  assessment  and  interest  so 
far  as  they  effect  the  general  interests  of  the  State?  A.  I  should 
be  in  favor  of  taxing  bonds  and  mortgages,  because  I  consider 
it  the  grossest  outrage  that  the  great  masses  of  the  people  suffer 
under  at  the  present  time;  I  consider  it  unjust  where  a  man  buys 
a  house  for  $3,000  and  pays  $500  down,  to  have  the  man  \vho  has 
got  that  mortgage  in  his  pocket  come  in  to  the  assessors'  office  and 
swear,  in  violation  of  the  truth  in  many  cases,  and  go  out,  withouc 
paying  his  proportion  of  the  public  burden;  I  say  that  a  man  should 
pay  in  proportion  to  the  interest  he  has  got  in  the  property.  J 

Q.  Is  it  your  experience  that  that  character  of  indebted 
escapes  payment  of  its  proper  proportion?    A.  I  should  say 
teen-twentieths  of  it. 

Q.  Is  that  owing  to  any  deficiency  in  the  law?    A.  One  re 
is  the  assessors  do  not  perform  their  duty;  they  do  not  wish 
assume  the  responsibility  of  making  enemies  of  those  men,  and  of 
course,  they  let  it  go  by. 

Q.  How  could  it  be  overcome?  A.  By  making  this  man  swear, 
and  the  assessors,  if  they  act  in  a  judicial  capacity,  might  send 
a  few  of  them  to  State  prison  occasionally. 

Q.  Are  you  in  favor  of  adopting  what  is  known  as  the  listing^ 
system  to  correct  that  defect?    A.  I  don't  know  as  I  would. 

Q.  Would  you  be  in  favor  of  allowing  an  offset  for  personal-. ^ 
indebtedness?    A.  I  should  allow  him  no  more  privileges  than 
the  man  who  owns  real  estate;  my  idea  would  be  when  the  assess- 
ors inquire  who  owns  the  mortgages,  the  owner  of  the  mortgage  y 
is  so  and  so,  and  I  would  take  his  name  right  on  the  book;  it,.j 
is  a  simple  matter. 

Q.  Would  you  relieve  real  estate  by  a  deduction  for  its  indebt-  , 
edness?    A.  I  should;  yes,  sir. 

Q.  Have  you  any  other  suggestion  to  make  to  the  committee? 
A.  There  is  another  suggestion  that  I  have  that  L  think  is  quite( 
a  grievance  to  the  labor  element,  and  that  is  where  parties  buy  ( 
large  tracts  in  the  suburbs  of  the  city  with  the  intention  of 


373 

caking  twenty-five  to  fifty  per  cent,  who  go  to  the  assessors 
nd  use  all  means  to  have  this  tract  assessed  as  farming  land, 
nd  the  parties  who  try  to  build  up  a  home  for  themselves  and 
hildren,  the  whole  responsibility  comes  on  them;  I  consider  that 
gross  outrage  on  the  people;  they  have  great  tracts  of  land 
nd  a  million  in  moiiey;  who  pays  that;  it  is  the  parties  who  are 
rying  to  buy  homes  for  their  children;  it  is  a  jrross  outrage. 

By  the  Chairman. 

Q.  Where  r"oes  that  i.ome  in?  A.  Those  parties  who  buy  tracts 
f  land  in  a  great  many  cases  they  do  not  pay  one-tenth  of  what 
t  is  worth;  then,  when  they  sell  a  lot  to  mechanics  or  others, 
ley  charge  them  exorbitant  prices. 

Q.  A  purchaser  is  not  bound  to  pay  that?  A.  He  is  to  a 
ertain  extent,  because  those  parties  will  take  §500  on  a  house 
rorth  $2,500. 

Q.  Do  you  think  they  ought  to  be  compelled  to  sell  their  land 
or  less?  A.  No,  sir. 

Q.  Where  is  the  remedy?  A.  Those  parties  that  have  the 
nortgage  make  them  pay. 

Q.  Don't  you  think  that  the  gross  outrage  is  here,  that  men 
tiat  take  the  position  of  assessors,  take  an  oath  to  perform  their 
uties  and  fail  to  do  it  in  so  far  as  they  assess  that  property 
nstead  of  city  property?  A.  Yes,  sir;  I  know  that  to  be  a 
act,  and  a  man  that  assumes  the  responsibility  of  living  up  to 
lie  strict  letter  of  the  law  is  placed  in  a  false  position. 

Q.  How  many  assessors  are  there  in  Syracuse?    A.  Four. 

Q.  Are  you  one  of  them?  A.  No,  sir;  not  now;  the  law  can 
>e  violated  with  impunity;  I  have  known  bankers  come  into  our 
ffice  who  sold  property  for  $14,000  and  they  want  that  appraised 
or  $1,000;  a  gentleman  came  and  stated  that  he  sold  off  a  por- 
ion  of  the  property  to  a  certain  man;  I  saw  the  man  previous 
o  that  and  I  asked  him  how  much  did  he  pay  for  this;  this  man 
ame  in  and  says:  "I  want  this  portion  of  the  property  stricken 
mt."  "What  did  you  get  for  that?"  He  says:  "It  is  none 
rf  your  business;  it  is  outside  of  your  business."  "Well,"  t  says, 


374 

"It  seems  to  me  it  is  necessary  we  should  know."  He  says, 
"Yon  take  $1,000,  that  will  be  all  right."  I  says,  "I  can  not 
do  that."  I  asked  him,  didn't  this  gentleman  pay  him  $14,000; 
he  went  out  of  the  office  in  a  huff  and  refused  to  pay,  but  ho  had 
to  come  to  time  to  a  certain  extent. 

Q.  How  much  did  you  deduct  —  f  14,000?    A.  Not  quite  thi 
we  trimmed  it  down  a  little;  there  are  thousands  of  men  in 
same  way,  and  your  experience  going  around   the  State  mi 
show  you  the  same  thing. 

Q.  You  say  that  one  of  the  great  difficulties  is  that  the  ass 
ors  don't  enforce  the  law?    A.  Yes,  sir;  I  say  so. 

Q.  How  do  you  remedy  that  defect?    A.  It  is  a  pretty 
matters;  of  course,  we  all  have  our  friends  more  or  less,  and  thei 
wheedle  us,  etc. 

Q.  Of  course,  the  Legislature  can  go  on  passing  laws  yt 
after  year,  but  if  the  officers  created  under  the  law  will  not 
enforce  the  law,  then  the  remedy  does  not  seem  to  be  with  the 
Legislature?  A.  Then  create  a  good  wholesome  public  opinion; 
have  those  men  held  up  to  public  contempt  and  send  a  few  of 
them  to  Auburn  once  in  a  while. 

Q.  Have  you  made  any  effort  to  do  that?  A.  Yes,  sir;  I  have 
tried  it  and  made  enemies  by  doing  so;  I  have  made  enemies 
by  doing  so;  I  have  had  a  banker  invite  me  over  to  his  office  to 
try  and  coax  me  out  of  it,  and  I  said  "no;  you  can  not  do  it; 
you  had  better  go  over  and  talk  to  the  board;"  it  is  a  pretty 
trying  position. 

Q.  How  are  the  assessors  created  here;  are  they  appointed 
or  elected?  A.  They  are  elected;  they  try  to  do  what  is  right, 
I  suppose. 

Q.  What  is  the  difficulty  that  confronts  a  man  that  tries  to 
do  his  duty;  is  the  difficulty  in  trying  to  get  a  nomination  or  an 
election?  A.  You  can  not  get  a  nomination  unless  you  will 
allow  yourself  to  be  made  a  catspaw  for  some  party  or  other;  a 
man  who  goes  in  there  entirely  independent  and  tries  to  act  just 
in  accordance  with  his  conscience  is  in  rather  a  peculiar  position. 

Q.  Can  you  suggest  a  remedy?    A.  I  should  be  in  favor  of 


375 

taxing  mortgages;  I  should  be  in  favor  of  having  the  assessors 
brought  up  once  in  a  while  and  made  examples  of. 

Q.  Don't  you  know  that  can  be  done  now?  A.  Yes,  sir;  of 
course  the  assessors  can  act  in  a  judicial  capacity,  but  you  know 
the  onus  they  assume  if  they  do  it. 

Q.  Don't  you  know  that  every  act  of  theirs  in  fixing  value  can 
be  made  a  subject  of  review  now  by  the  courts?  A.  It  is  occa- 
sionally; it  is  a  very  rare  incident  when  they  go  to  the  courts,, 
very  few  cases. 

Q.  You  think  there  is  a  very  general  and  strong  ground  of 
complaint  in  that  direction  in  the  city  of  Syracuse?    A.  I  am 
;i!t |  confident  of  it. 

Q.  Have  you  made  any  effort  at  all,  other  than  by  your  acts 
f|as  assessors  to  have  those  conditions  remedied?  A.  I  have  in 
public  meetings  and  in  societies  that  I  belong  to;  it  is  generally 
understood  to  be  a  gross  outrage;  parties  that  speculate  and  buy 
land  and  parties  that  try  to  buy  a  home  to  avoid  paying  rents,, 
in  some  cases  where  they  don't  own  over  one-tenth,  I  say  it  is  a 
gross  outrage  that  they  should  pay  the  whole  of  it  and  the 
parties  owning  the  mortgage  not  pay  a  cent. 

Q.  Your  suggestion  is  to  remedy  that  case  would  be  to  allow 
the  holder  of  the  fee  of  the  property  a  reduction  to  the  extent 
of  the  incumbrance  upon  the  property  he  holds?    A.  Yes,  sir; 
and  reach  the  man  that  owns  the  mortgage;  just  take  a  memo- 
urn  of  the  name;  it  is  7ery  simple;  of  course  the  influence  is 
too  powerful;  the  influence  of  the  concentrated  wealth  of  this 
State  is  too  much  in  Albany  for  my  understanding. 
,  Q.  How  a,bout  Syracuse?    A.  The  same  thing  holds  good  here; 
ou  can  not  reach  those  men. 

Q.  How  many  years  were  you  assessor?    A.  Two  years. 

Q.  One  term?    A.  Yes,  sir. 

By  Mr.  Guenther. 

Q.  Have  you  ever  thought  of  this  proposition,  you  say  a  man 
ibuys  a  house  and  lot  for  $3,000  and  pays  $500  down,  and  tiiere 

a  mortgage  on  for  $2,500 ;  the  person  that  bought  the  property 
|should  pay  ;i  tax  on  $500?  A.  Yes,  sir;  on  his  equity. 


Q.  Don't  you  know  it  to  be  a  fact  that  lie  is  enjoying  that 
entire  property  and  why  shouldn't  he  then  pay  for  it?    A. 
is  enjoying  it  but  he  has  njt  gotfthe  interest;  he  can  be  put  01 
at  any  time,  but  this  man  that  has  got   three-fourths  of 
interest  in  his  pocket  is  not  paying  a  cent  of  tax. 

Q.  This  other  man  is  getting  off  from  paying  rent?    A. 
does  this  to  avoid  paying  rent,  but  in  a  great  many  cases  thej 
pay  a  certain  amount  and  the  a  they  can  not  meet  their  obligatioi 
and  the  result  is  they  lose  it  all. 

Q.  In  your  opinion  the  whole  trouble  is  that  the  people  who 
are  entrusted  to  perform  a  certain  duty  fail  to  perform  their 
duty,  and  not  with  the  law  and  public  opinion  is  very  peculiar 
and  those  men  don't  want  to  make  enemies. 

Q.  Then  the  trouble  is  that  men  entrusted  with  this  do  nc 
perform  their  duties?    A.  They  trim  with  the  public  to  a  cert 
extent. 

By  the  Chairman. 

Q.  What  do  you  think  tiie  earning  capacity  of  money  ougl 
to  be  —  not  in  business,  but  as  an  investment,  what  do  you  thi 
it  ought  to  produce;  the  rule  is  to  have  it  produce  all  they 
get,  I  suppose;  but  I  suppose  five  or  six  per  cent  ought  to 
reasonable  but  in  a  great  many  cases  they  realize  twenty 
cent. 

Q.  I  mean  money  invested  for  the  interest  it  would  bring,  nc 
in  an  every  day  business,  but  as  a  solid  investment;  what  intei 
do  you  think  it  ought  to  pay  in  order  to  compensate  a  man 
his  money?    A.  The  legal  rate  is  six  per  cent, 

Q.  I  ask  you  what  you  think  it  ought  to  produce  to  compens 
a  man  for  the  loan  of  his  money?    A.  Where  a  man  loans  a 
amount  of  money  for  a  long  term  he  can  afford  to  loan  it  cheaj 
I  should  think  five  per  cent. 

Q.  If  you  had  $25,000  to  loan  on  bond  and  mortgage  it  ougl 
to  produce  what;  there  are  money  lenders  that  realize  eight 
ten  per  cent;    this  city  is  infested  with  that  class  of  men  tl 
take  advantage  of  the  poor  and  realize  twenty-five  per  cent,  an< 
you  have  gK>t  it  in  New  York  and  Brooklyn. 


377 

Q.  A  good  rule  is  the  golden  rule;  put  yourself  in  the  other's 
place,  what  would  you  like  to  receive,  and  what  do  you  think 
vould  be  a  fair  compensation  for  a  loan  of  $5,000  that  you  would 
make?  A.  If  I  had  that  amount  of  money  I  think  six  per  cent 
hrould  be  reasonable. 

Q.  It  ought  to  bring  you  six?    A.  Five  or  six,  human  nature 
a  rule  is  selfish  and  we  try  to  do  the  best  we  can;  when  you 
right  down  to  the  practical  application  we  will  get  all  we 

Q.  You  would  do  the  same  thing  wouldn't  you?    A.  Yes,  sir; 
think  I  would. 

Q.  But  when  we  criticise  and  find  fault  we  are  not  so  apt  to 
link  what  would  be  our  personal  view  if  we  were  in  the  other 
lan's  place?    A.  No. 
Q.  You  think  if  you  had  money  it  ought  to  produce  at  least  five 

cent?    A.  Yes,  sir. 
Q.  What  do  you  find  to  be  the  average  rate  of  interest  in  the 
ty  of  Syracuse  on  mortgages?    A.  Some  of  our  large  business 
Blocks  recently  built  have  borrowed  money  for  a  long  term  I  under- 

id  at  four  per  cent,  a  large  amount. 
Q.  What  is  the  rate  of  taxation  in  Syracuse?    A.  It  is  nomi- 
lly  assessed  full  value. 
Q.  I  mean  the  rates?    A.  I  should  judge  about  seventy-five 

cent. 

Q.  What  is  your  tax  rate;  you  don't  understand?    A.  I  think 
is  a  little  over  one  per  cent  —  one  dollar  and  eighty  cents. 
Q.  You  say  those  loans  are  paying  four  per  cent?    A.  I  have 
lerstood  so. 

Q.  You  would  be  in  favor  of  assessing  those  mortgages  one 
lar  and  eighty  cents?    A.  I  should  assess  them  a  reasonable 
iount;  I  would  assess  them  so  as  to  make  them  pay  in  propor- 

to  the  interest  they  have  got  in  the  property. 
Q.  How   would   you   distinguish   between   the   assessment   on 
and  other  property?    A.  Suppose  the  assessors  went 
>und  and  said :   "  We  have  assessed  you  so  much ;"  they  would 
48 


378 

say:  "Here,  I  have  got  a  lien  on  this,"  say  f 250,000;  "What  do 
you  pay  on  that;"  "four  per  cent,"  and  then  the  assessor  could: 
take  a  memorandum  of  it  and  look  at  it  and  say:  "  Let  us  equalizer 
that  matter." 

Q.  Do  you  mean  to  have  them  maintain  a  distinction  —  to 
a  value  on  the  mortgagye  or  to  lower  the  rate  on  the  assessmt 
A.  I  don't  believe  in  allowing  the  assessors  too  much  discretion; 
I  would  want  a  uniform  rule. 

Q.  Wouldn't  you  have  the  mortgage  assessed  for  its  full  valu( 
A.  Yes,  sir. 

Q.  Wouldn't  you  have  the  same  rate  of  taxation  on  the  mort< 
gage  that  you  had  on  the  real  estate?    A.  It  seems  to  me  that 
ought  to  appear  the  same. 

Q.  Inasmuch  as  you  say  that  the  amount  of  the  mortgage  ought 
to  be  deducted  from  the  value  of  the  real  estate  itself  shouldn't  f 
the  assessment  rate  be  the  same?    A.  I  think  so. 

Q.  You  think  then  that  it  would  be  fair  to  assess  a  mortgage  I 
that  was  paying  four  per  cent  one  dollar  and  eighty  cents?  A. 
Of  course  those  matters  could  be  adjusted  by  a  little  judgment  j 
and  discretion;  there  would  have  to  be  some  discretion  with  the  I 
assessors ;  I  would  prefer  to  have  manufacturing  establishments  I 
assessed  at  a  very  low  rate,  such  as  the  Sweet  works  and  all  those  k 
large  interests,  I  should  be  in  favor  of  touching}  them  very  lightly  in  | 
the  matter  of  assessment. 

Q.  That  would  be  in  valuation?    A.  Yes,  sir. 

Q.  }>at  the  rate  would  be  the  same?  A.  Yes,  sir;  it  would  be| 
virtually  the  same. 

Q.  Your  mortgage  of  |5,000,  what  would  you  think  of  it  when  j 
they  came  to  assess  your  mortgage?  A.  If  there  was  a  uniform  j 
law  the  assessors  could  have  some  discretion  and  adjust  them  all  :|? 
in  an  equal  and  proper  manner. 

Q.  What  would  you  suggest?    A.  I  should  prefer  to  have  a 
uniform  law,  but,  of  course,  the  assessors  will  have  some  discretion- 1 
ary  power;  you  can  not  avoid  that. 

Q.  What  discretion  could  be  given  to  the  assessors  to  fix  the! 
value  of  your  mortgage  less  than  $5,000,  if  it  was  a  good  loan?  A. 


379 

|[  should  think  it  ought  to  be  the  same  thing,  but  you  get  a  man 
[in  a  false  position;  YOU  would  have  to  regulate  that  by  some  dis- 
rretion;  you  can  not  have  iron-clad  rules  in  those  matters;  the 
treat  thing  is  each  man  to  pay  in  proportion  to  his  interest  in  the 
public  domain. 

I  Q.  Your  recommendation  was  on  condition  that  mortgages  ought 
to  be  assessed?  A.  Yes,  sir. 

Q.  Now,  you  say  that  your  money  ought  to  pay  you  five  per  cent? 
IV.  T  think  about  that. 

Q.  2sow,  if  you  are  going  to  assess  that  mortgage,  one  and  eighty- 
Limdredths,  how  are  you  going  to  get  your  five  per  cent?  A.  Of 
course,  you  would  have  to  trim  those  matters  dowrn;  you  would 

ive  to  use  some  discretion. 

By  Mr.  Stranahan. 

Q.  The  people  say  that  if  we  got  it  all  on  the  roll  it  would  be 
uch  less  than  one  and  eighty -hundredths?    A.  The  more  property 
j.    ou  reach  the  cheaper  it  would  be. 

Q-  Might  it  not  be  the  fact  that  what  you  have  been  complaining 
bout  as  to  the  conduct  of  the  other  assessors  in  Syracuse  —  might 
t  not  have  been  the  exercise  of  that  same  discretion  which  you 
ink  ought  to  be  given  them?    A.  I  don't  wish  to  say  a  thing 
hurt  their  standing  in  the  community;  I  say  that  public  opinion 
a  certain  extent  has  run  in  that  direction,  and  the  assessors 
merely  the  representatives  of  public   opinion  to  a   certain 
tent;  they  try  to  do  what  is  right. 

By  Mr.  Guenther.  , 

Q.  When  you  first  took  the  stand  you  found  fault  with  the  discre- 
mary  powrers  exercised  by  the  assessors  and  claimed  that  they 
mid  not  have  that  power;  now  you  claim  that  the  assessors 
have  that  power?    A.  The  fault  lies  in  allowing  those 
nen  to  deduct  indebtedness  assumed  before  they  go  to  the  assessors 
[ice;  they  assume  fictitious  indebtedness;  this  is  a  notorious 
t  patent  to  everybody  that  has  studied  the  question. 


380 

Q.  You  say  you  think  your  money  ought  to  produce  five  per  cent, 
and  by  saying  that  you  must  mean  that  it  thereby  should  be 
exempted  from  taxation?  A.  Oh,  you  can  not  get  me  in  that  posi- 
tion; those  things  would  eventually  adjust  themselves;  you  have; 
got  to  allow  some  discretion  to  the  assessors,  but  this  is  a  gross 
outrage  that  stands  out  as  a  prominent  fact;  it  is  a  gross  outrage. 

By  Mr.  Gifford. 

Q.  You  say  that  your  $5,000  in  capital  ought  to  earn  you  aboi 
fire  per  cent}?    A.  Yes,  sir. 

Q.  If  you  had  that  same  amount  invested  in  farming  lam 
what  do  you  think  it  ought  to  earn  you  then;  would  you  like 
have  it  earn  about  the  same?    A.  It  should,  but  they  say  they 
don't  earr  over  three  or  four;  why  shouldn't  it  be  as  protital 
there  as  anywhere  else? 

Elisha  Cooke,  called  as  a  witness,  being  duly  sworn,  testifi* 
as  follows : 

By  Mr.  Hamilton. 

Q.  You  reside  at  Poplar  Ridge,  Cayuga  county?    A.  Yes, 

Q.  You  are  a  member  of  the  State  Grange?    A.  Yes,  sir; 
the  executive  committee. 

Q.  Are  you  also  a  member  of  the  Farmers'  Alliance?    A.  I 
when  it  was  in  running  order  in  our  country;  I  have  been 
member. 

Q.  What  is  your  occupation?    A.  I  own  a  farm  and  have 
carried  on ;  my  son  is  farming  it ;  I  am  a  farmer. 

Q.  Are  you  also  engaged  in  any  mercantile  business?    A.  ~ 
particularly;  I  am  agent  for  fertilizers. 

Q.  Have  you  occupied  the  office  of  supervisor?  A.  Yes,  sir;  I 
have  been  supervisor  of  the  county. 

Q.*For  how  long?  A.  I  think  it  was  seven  years  I  was  in  t!ie 
board. 

Q.  In  those  various  capacities  and  as  a  member  of  the  Grange 
and  Farmers'  Alliance,  have  you  had  any  discussion  and  given 
any  consideration  to  this  question  of  taxation?  A.  Yes,  sir. 


381 

Q.  Wliat  have  you  to  say  as  to  the  propriety  of  modifying  the 

present  laws  relating  to  taxation,  assessment  and  interest,  so  far 

las  they  affect  the  agricultural  and  other  interests  of  the  State? 

I  A.  My  opinion  is  that  it  is  unjust  to  exempt  debts  upon  personal 

•property;  I  can  not  see  the  justice  of  printing  them  that  way. 

Q.  Is  that  opinion  generally  entertained  by  the  people  in  your 
I  community?    A.  I  think  it  is  as  a  general  thing. 

Q.  In  what  direction  should  relief  come  in  your  judgment  —  by 
empting  it  in  either  case,  or  refusing  to  exempt  it  in  either? 
If  it  was  practicable  to  do  it,  I  think  it  would  be  proper  to 
:empt  it  in  both  cases,  but  owing  to  the  difficulty  of  getting  any 
perty  to  tax  under  such  a  law,  I  think  it  would  not  be  advis- 
ble  to  exempt  in  either  case,  because  there  would  be  so  many 
umped-up  debts  on  the  road  that  there  would  be  nothing  to  tax. 
Q.  Is  the  sentiment  of  your  community  in  favor  of  the  listing 
lystem?    A.  It  is  amongst  part  of  the  people;  I  don't  think  it  is 
versal. 

Q.   Is   it   Ihe   prevalent   sentiment   or   the   exception?    A.   I 
ould  judge  that  it  was  the  prevalent  sentiment  to  a  certain 
tent;  I  don't  think  it  would  be  the  sentiment  to  have  the  listing 
tern  just  as  the  laws  are,  for  the  fact  that  I  think  the  fanners 
ould  have  an  idea  that  everything  they  had  could  be  seen,  and 
t  would  be  worse  than  it  is  now. 

Q.  How  could  that  be  avoided  under  the  listing  system?    A.  I 
that  if  the  law  was  changed  so  as  not  to  allow  exemptions 
personal  property  for  debts;  couple  the  two  together  would 
Ive  the  question. 

Q.  And  would  be  beneficial  to  the  agricultural  community? 
Yes,  sir. 

Q.  What  is  the  sentiment  of  your  community  as  to  the  present 
,te  of  interest?  A.  Well,  I  think  farmers  would  prefer  to  have 
reduced;  I  don't  know;  there  has  been  very  little  said  on  that 

t  in  my  hearing  but  personally  I  think  it  should  be. 
Q.  Can  you  tell  us  the   approximate  amount  of  mortgaged 
btedness  on  farms  in  your  county?    A.  It  is  a  pretty  hard 
to  get  at  practically  to  make  any  more  than  an  approxima- 


382 

tion;  since  I  received  Mr.  Gifford's  letter  I  looked  over  probably 
within  say  two  miles  of  our  town  where  I  live,  and  I  know  pretty 
much  the  incumbrance  on  that;  it  might  compare  with  tho 
property  in  the  rest  of  the  town,  and  I  found  about  one  farm  in 
three  had  a  mortgage  on  it. 

Q.  To  what  extent?  A.  Of  course  some  are  more  than  others ; 
in  estimating  the  number  of  acres  and  the  amount  of  mortgages 
as  far  as  I  knew,  I  figured  that  it  would  average  about  ten  dol- 
lars an  acre. 

Q.  What  would  be  the  average  value  of  that  land  per  acre? 
A.  Ours  is  one  of  the  town^  which  is  bonded  for  a  railroad  and 
property  is  not  selling  now  at  all,  the  town  of  Venice  it  is  assessed 
I  think  at  about  twenty  six  dollars  or  twenty-seven  dollars  an 
acre. 

Q.  That  would  be  a  little  more  than  the  assessed  valuation! 
"A.  Yes,  sir;  1  don't  think  it  would  sell  for  much  more  than  it 
is  assessed  on  an  average;  the  railroad  facilities  are  limited  and 
the  bonding  makes  it  dull;  really  the  land  is  worth  more;  we  are 
equalized  to  thirty-six  dollars. 

Q.  Do  you  know  whether  ihat  percentage  is  a  fair  average  fo|l 
your  county  or  not?  A.  I  should  think  it  was. 

Q.  During  the  period  of  the  past  ten  years  has  this  mortgaged 
indebtedness  of  your  community  been  on  the  increase  or  decrease? 
A.  I  should  think  it  had  been  a  littJe  on  the  increase;  not  much 
difference;  I  think  it  has  been  on  the  increase  to  a  certain 
extent. 

Q.  How  about  the  earning  capacity  of  farming  lands  in  your 
county?  A.  That  has  beon  decreasing  very  much  in  the  last 
ten  years  on  account  of  the  prices. 

Q.  What  is  the  relative  proportion  of  real  and  personal  estate 
in  your  county  as  assessed?  A.  I  think  our  roll  amounts  to 
between  $600,000  and  $700,000  in  our  town  and  the  personal 
about  ninety  odd  thousand;  that  would  be  about  one-seventh. 

Q.  Is  that  the  average  a.\n  of  your  county?  A.  Very  nearly; 
there  is  some  $27,000,000  assessed  valuation  of  real  and  3,500,00<H 
of  the  other  that  will  be  about  the  same  proportion,  abdut  one- 
eighth. 


383 

Q.  What  in  your  judgment   is   the  true  proportion  between 
and  personal  property  in  your  community  —  actual  value? 
Outside  of  the  city  of  Auburn? 
Q.  Yes,  sir.     A.  Just  the  town? 

Q.  Yes,  sir.    A.  I  think  personal  property  on  the  farms  alone 
rould  average  pretty  clearly  fl,000  to  a  hundred-acre  farm,  to 
ly  nothing  of  the  mortgages  as  now  given  in. 
Q.  I  am  speaking  UOAV  of  all  personal  property  subject  to  taxa- 
>n?    A.  My  judgment  would  be  that  there  was  about  half  as 
tuch  personal  property  as  there  was  real  in  our  town,  including 
te  stores,  mortgages,  on  the  farm  personal  property. 
Q.  So  that  the  true  proportion  of  personal  property  upon  which 
ixes  should  be  collected,  would  be  about  thirty- three  per  cent  of 
te  entire  tax,  where  to-day  it  is  in  the  neighborhood  of  twelve 
cent?     A.  Yes,  sir;  take  it  in  the  county  entire  I  think  it 
rould  be  about  fifty  per  cent. 

Q.  I  believe  you  stated  that  the  value  of  farm  land  in  your 
mnty  has  been  steadily  depreciating?    A.  Yes,  sir;  it  has. 
Q.  To  what  cause  is  th-it  attributable?    A.  More  particularly 
the  prices  of  produce. 

Q.  How  far  has  the  quesiion  of  taxation,  if  at  all,  had  any 
feet  upon  that  decrease?    A.  It  has  had  an  effect  on  our  own 
>wn,  and  taxes  have  been  very  high,  paying  interest  on  the 
mds,  that  has  affected  it  locally  more  than  outside. 
Q.  That  was  owing  to  foo  voluntary  indebtedness  assumed  by 
te  town  for  railroad  properties?    A.  Yes,  sir. 
Q.  What  the  general  State  tax  and  the  general  county  tax  has 
)t  produced  those  difficulties  or  contributed  materially  to  them? 

No,  sir;  I  should  not  think  it  had. 

Q.  What  do  you  think  as  to  the  propriety  of  modifying  the 
mt  laws  relating  to  taxation,   assessment  and  interest,  so 
as  they  affect  the  agricultural   and  other  interests  of  the 
ite?    A.  I  would  say  than  there  should  be  some  way  devised 
which  personal  property  could  be  reached;  the  assessment 
to  be  governed  by  a  different  rule  in  each  county. 


384 

Q.  Would*  the  relieving  of  your  county  from  the  necessity  of 
raising  any  part  of  the  State  tax  be  desirable?  A.  It  would  to 
those  who  live  in  the  county,  of  course. 

Q.  If  it  were  raised  by  this  specific  tax  levied  upon  inheritance^ 
bonded  indebtedness  and  the  like?  A.  Yes,  sir;  it  has  already 
affected  our  State  tax. 

Q.  And  in  the  event  of  such  a  scheme  beini;1  devised,  wh» 
would  be  the  impression  in  your  community  as  to  the  enactment 
of  the  local  option  tax  law  by  which  each  county  then  wou* 
be  at  liberty  to  establish  a  rule  upon  the  question  of  taxation 
and  the  property  which  should  be  subject  to  it  and  the  proper] 
tion?  A.  That  is  a  point  that  I  have  never  tlurijrht  of;  I  didn» 
know  there  was  any  such  idea;  I  kind  of  think  that  would  m 
a  good  way  to  do  it. 

Q.  What  is  the  sentiment  of  your  community  in  regard  to  the 
inheritance  tax?  A.  So  far  as  I  have  heard,  it  has  been  adverse; 
there  has  been  a  good  deal  of  fault  found  with  it. 

Q.  Of  course,  you  know  it  has  relieved  the  county  from  a  great! 
proportion  of  the  State  tax?  A.  The  fault  was  found  that  ra 
are  affected  by  it  without  reference  to  its  effect  upon  other  people,! 

Q.  I  am  speaking  now  as  to  the  general  sentiment  of  your  com-f 
munity  as  to  the  present  law?  A.  I  think  the  general  sentimenu 
would  be  favorable. 

Q.  What  as  to  the  increase  of  it  having  what  is  known  as  8* 
graded  tax;  the  larger  the  bequest  the  greater  the  tax?    AJ 
could  not  say  as  to  that;  I  would  not  know  hardly  what  to  say.u 

Q.  What  would  be  the  sentiment  of  your  community  as  to  thr 
levying  of  the  same  tax  for  inheritances  on  real  estate  nov; 
levied  under  the  law  as  to  personal?    A.  My  opinion  would  b« 
that  they  should  be  placed  upon  the  same  footing;  I  don't  se<i 
why  they  should  discriminate. 

Q.  Have  you  any  other  suggestions  to  make  to  the  cominitte 
to  which  your  attention  has  not  been  called  during  your  examine 
tion?  A.  Nothing  particularly  further  than  I  have  often  bee: 
impressed  with  the  fact  that  parties  that  are  earning  incomes  in  th 


385 

[way  of  salaries  to  a  large  extent  are  exempt  from  taxation 
entirely,  whereas  farmers  or  any  other  business  man  that  are 
not  earning  any  more  are  taxed  for  the  amount  of  their  farm  on 
which  they  earn  it;  it  seems  to  me  that  taxation  should  be  in 
[proportion  to  the  income. 

Q.  Would  yon  favor  an  income  tax?  A.  Yes,  sir;  if  it  can  be 
pone  right  —  a  certain  kind  of  income  tax;  our  country  officers  — 
jjudges,  get  $2,000  a  year  and  they  do  not  pay  any  taxes  on  that 
kt  all;  the  farmer  has  to  have  200  acres  to  earn  that. 

Q.  You  would  be  in  favor  of  an  income  tax  confined  to  public 
bfficers?  A.  No,  sir;  let  the  income  tax  be  on  everybody,  provid- 
ing we  can  get  at  it  right;  of  course,  it  would  require  careful 
laws  to  get  at  it  right,  but  I  never  could  see  why,  if  I  earned 
B2,000  on  a  farm,  I  have  to  pay  and  he  has  an  education  that 
pidn't  cost  any  more  than  the  farm  did,  he  should  not  have  to 
>ay  any  taxes;  it  seems  to  me  that  something  should  be  done 
catch  those  high-salaried  fellows  that  don't  pay  any  tax  but 
ive  easy  too. 

T5y  the  Chairman. 

Q.  A  farmer  is  taxed  upon  the  amount  of  property  he  holds? 
i.  Yes,  sir. 

Q.  Whereas,  the  other  man  who  has  an  income  may  not  have 
[ny  property  at  all,  either  real  or  personal.    A.  What    differ- 
ice  does  that  make? 

Q.  You  would  tax  the  man's  brains?    A.  The  income  which 
is  produce;  it  takes  a  good  deal  of  brains  to  run  a  farm, 
much  in  a  certain  way  as  any  other  business. 
Q.  In  the  one  case  you  would  be  taxing  capital  and  in  the 
ler  case  you  would  not?    A.  Well? 
Q.  If  you  taxed  the  farmer  upon  his  brains  or  his  income, 
would  not  have  the  right  of  taxing  him  upoii  Ms  capital? 
No,   sir;  not  both;   a  business  that  produces  something  is 
to  pay  taxes;  farmers  have  got  to  pay  taxes  if  they  do  not 
a  dollar  out  of  the  farm. 
49 


386 

Q.  Suppose  a  man  has  no  business  other  than  he  may  be 
employed  by  some  one  else?  A.  Tax  him  according  to  what  he 
earns;  it  may  be  only  a  theory;  it  might  not  work  practically,  but 
I  think  it  is  right  in  theory. 

Q.  What  is  the  sentiment  of  your  community  upon  the  question 
of  taxing  saving  banks  deposits?  A.  I  never  heard  that  dis- 
cussed. 

Q.  What  is  your  own  individual  opinion?  A.  I  think  there 
might  be  a  tax  on  their  income  or  something;  it  would  not  do  to 
tax  them  on  all  their  deposits;  I  don't  see  why  they  should 
have  some  tax  on  them;  it  would  be  my  opinion  there  should 

Q.  Suppose  the  farmers  in  Cayuga  county  were  relieved  enti 
from  taxation  on  the  real  estate,  do  you  think  that  within  a  y 
or  two  years  there  would  be  any  visible  improvement  in  th 
condition  on  that  account?    A.  Yes,  sir;  I  think  there  would. 

Q.  Of  course  my  question  only  relates  to  the  State  tax, 
State  purposes?    A.  It  would  be  to  a  limited  extent;    of  co 
there  would  be  more  inducement  for  people  to  buy  land  and 
would  be  better  for  farmers  to  own  land. 

Q.  How  many  acres  do  you  own?     A.  One  hundred  and  fifty. 

Q.  What  is  the  basis  of  valuation  for  assessment;  what  is 
valued  an  acre?  A.  The  average  of  the  town  is  twenty-seven; 
my  farm  alone  I  think  is  averaged  about  fifty;  they  reduced  it 
some;  it  was  fifty;  about  forty-five  they  have  got  it,  but  then 
that  is  higher  than  the  proportion,  because  I  have  got  more 
buildings  and  improvements. 

Q.  Have  you  any  idea  what  proportion  of  the  tax  that  you  pay 
on  that  land  goes  to  the  State?  A.  I  never  figured  it  out. 

Q.  In  1890  you  paid  a  tax  amounting  to  about  ninety-five  dol 
lars,  didn't  you?  A.  Yes,  something  like  that;  our  town  and 
railroad  tax  is  about  six  dollars  on  1,000  —  the  interest  on  the 
bonds,  and  they  have  been  paying  up  some. 

Q.  The  report  of  the  State  assessors  shows  that  in  your  town 
the  amount  paid  to  the  State  for  school  taxes  was  $1,134;  that 


387 

the  amount  paid  to  the  State  for  other  purposes  was  $1,417.50; 
the  total  amount  of  taxes  collected  in  your  county;  the  total 
amount  contributed  by  you  towards  the  State  would  be  between 
one-fifth  and  one-sixth,  and  on  that  basis  it  would  seem  that  the 
proportion  of  taxes  that  you  paid  that  went  towards  defraying 
the  expenses  of  State  government  was  a»bout  sixteen  dollars?  A. 
[I  suppose  that  would  be  about  it. 

Q.  Now  you  don't  think  that  in  the  same  proportion  such  a  con- 
Itribution  as  that  from  the  farmers  of  Cayviga  county  has  very 
much  to  do  with  the  present  depressed  condition;  it  is  not 
burdensome  is  it?  A.  No,  if  that  was  all  it  would  not  be  a 
[great  deal,  but  taken  in  connection  with  other  taxes. 

Q.  The  other  taxes  are  your  own  fault;  you  put  them  on  your- 
>lf?     A.  Yes,  sir. 

Q.  Is  it  not  a  fact  that  the  burden  of  taxation  in  .the  town  of 
renice  and  in  Cayu^i  county  generally  is  largely  of  a  local  nature? 
.  Yes,  sir ;  of  course  it  shows  that  from  the  amount. 
Q.  And  that  the  burden  is  in  a  very  small  part,  that  of  the 
State  —  the  expense  of  State  government?  A.  Yes,  sir;  of  course 
it  is  a  small  part  in  proportion  to  the  other. 

Q.  The  contribution  of  the  taxpayers  in  Cayuga  county  to  the 
State  government  can  not  in  your  opinion  be  considered  burden- 
>me,  can  it?  A.  No,  not  burdensome. 

Q.  And  the  present  depressed  condition  of  the  fanner  and  the 
former's  interests  are  attributable  to  other  causes  than  that  of 
ftate  taxes?    A.  Yes,  sir;  but  still  that  has  got  to  be  taken  with 
modification  from  the  fact  that  the  farming  business  has  to 
>mpete  with  other  business. 

Q.  Hasn't  every  other  kind  of  business  to  do  the  same?  A. 
ier  kinds  of  business  do  not  pay  the  taxes  that  the  farmers 
r,  even  in  proportion. 

Q.   Do  you  think  that  the  proportion  of  tax  that  the  farmer 
paying  for  the  support  of  the  State  government  is  a  good  cause 
complaint?    A.  It  would  not  be  if  it  was  necessary  for  them 
do  it,  but  the  fact  is  that  so  much  of  the  property  escapes  tara- 
that  is  in  competition  with  the  farmer  in  business,  and  conse- 


388 

quently  it  works  against  the  fanners,  because  their  property  can 
be  taxed,  whereas  the  storekeepers  and  merchants  get  rich  by  not 
paying  any;  the  fanners  pay  more  than  their  proportion,  that 
is  where  the  fault  is. 

Q.  You  mean  that  the  farmers  in  Cayuga  county  pay  more  than 
their  just  proportion  of  State  tax?  A.  Yes,  sir. 

Q.  Have  you  considered  that  only  from  the  standpoint  of 
Cayuga  county,  or  the  whole  State?  A.  I  suppose  the  whole 
State  is  probably  the  same  way;  I  don't  know  much  about  it, 
but  I  know  that  I  don't  believe  there  is  a  storekeeper  in  Auburn 
that  pays  one  cent  on  his  stock. 

Q.  Do  you  think  they  ought  to?     A.   Y^es,  sir;    I  think  th< 
ought. 

Q.  Suppose  they  did,  in  what  measure  do  you  think  it 
reduce  the  burden  of  taxation;   take  your  own  case  for  ii 
instead  of  paying  ninety-four  dollars  and  fifty  cents  a  year  h< 
much  do  you  think  you  would  have  to  pay?    A.  Of  course, 
coulc  not  tell  without  figuring  it  out;  I  think  it  would  reduce 
about  half;  it  would  reduce  the  State  tax  and  the  town 
county  tax  in.  the  same  proportion;  it  is  not  so  much  the  State  par- 
ticularly, as  it  is  the  whole  thing. 

Q.  Don't  you  think  that  the  present  law,  as  you  understand  it, 
if  properly  executed,  is  broad  enough  in  its  terms  to  reach  all 
this  property  that  escapes  taxation,?  A.  I  don't  think  it  is  the 
way  it  is  interpreted,  because  I  know  cases  in  my  village,  where  a 
mcrchani  —  he  is  not  living  now  —  he  had  quite  a  stock  of  goods, 
probably  |3,000  or  f 4,000  worth  of  goods;  he  bought  government 
bonds,  gave  his  note  and  turned  the  note  against  his  stock  of 
goods,  and  was  exempted;  a  farmer  can  not  do  it. 

Q.  You  believe  that  all  personal  property  ought  to  be  assessed? 
A.  Yes,  sir;  I  do. 

Q.  Including  stock  and  implements  on  the  farm?  A.  Yes,  sir; 
I  would  not  ask  that  they  should  be  exempted;  if  they  took  other 
personal  property,  I  don't  believe  in  class  legislation. 

Q.  Ha?e  you  made  any  effort  to  have  the  law  executed  so  far  as 
personal  property  on  the  farm  is  concerned?  A.  I  have  never 
been  an  assessor. 


389 

Q.  You  are  a  citizen  of  Cayuga  county,  interested  in  the  enforoe- 
ment  of  the  law  ?  A.  All  the  fanners  owe  more  or  less  outstanding 
bil1^  and  they  turn  the  personal  in  against  it. 

Q.  Are  you  cognizant  of  the  fact  that  you  have  been  escaping 
taxation?  A.  I  have  on  my  stock  and  tools. 

Q.  Have  you  made  any  effort  to  have  them  taxed?  A.  "No; 
because  1  didn't  think  they  should  be;  I  know  the  other  fellows 
didn't  pay  any  on  personal  property,  and  I  didn't  want  to  pay  on 
real  and  personal  both. 

Q.  Suppose  you  had  gone  to  the  assessors  and  told  them,  you 
had  so  many  thousand  dollars  worth  of  stock  on  your  farm,  sub- 
ject to  taxation,  and  insisted  upon  their  assessing  it,  don't  you 
I  think  they  would  have  done  it?  A.  I  presume  they  would. 

Q.  Don't  you  think  if  you  had  gone  to  the  assessors  and  said 
| that  your  neighbor  had  also  a  certain  amount  of  personal  prop- 
erty on  his  farm  not  taxed,  that  they  would  also  have  taxed 
im?    A.  I  suppose  they  would;  anyway  if  they  could  i.ot  show 
ley  had  offsets,  but  most  all  farmers  have  offsets. 
Q.  Don't  you  think  it  was  in  your  power  to  secure  the  enforce- 
tent  of  the  law,  so  far  as  the  taxation  of  personal  property  was 
mcerned,  on  farms  at  least?    A.  Yes,  sir;  it  would  be  on  farm?, 
nit  not  on  personal  property  of  the  other  class;  that  is  what  I  corn- 
tin  of. 

By  Mr.  Guenther. 

Q.  Personal  property  held  by  you  escapes  in  proportion  taxa- 
>n  to  the  same  extent  as  personal  property  held  by  some  one 
the  city;  aren't  you  getting  the  benefit  as  well  as  those  in  the 
Ity?  A.  We  might  be  getting  some,  but  nothing  like  the 
lount  they  escape. 

Q.  The  only  benefit  you  would  derive  would  be  the  reduction 
this  sixteen  dollars?     A.  No,  sir;  on  the  whole. 
Q.  Then  it  would  come  down  that  the  people  would  elect  people 
rho  would  take  care  of  their  interests?    A.  They  can  not  take 

of  their  interests  under  the  present  law. 
Q.  Don't  you  make  your  own  expenses  in  the  town?    A.  We 
:e  the  expenses  but  we  can  not  make  them  pay  in  proportion 
the  value  of  the  property  in  the  town. 


390 
By  the  Chairman. 

Q.  Have  you  ever  stopped  to  consider  the  amount  of  personal 
property  of  farm  stock  and  implements  that  escape  taxation  in 
Cayuga  county?  A.  To  tell  the  truth  I  don't  think  there  is  any 
escapes  of  any  amount  but  what  the  parties  owe;  there  is 
hardly  any  of  us  but  what  have  more  or  less  floating  indebtedness, 
notes  or  something  of  that  kind. 

Q.  What  proportion  does  the  value  of  your  personal  property 
on  your  farm  bear  to  your  real  estate;  your  farm  is  valued  at 
$6,750;  what  proportion  would  your  personal  property  bear  to 
that?  A.  They  do  not  assess  real  estate  what  they  consider  its 
real  value;  I  should  think  about  one-tenth  would  be  as  a  general 
-thing  an  average. 

Q.  You  think  you  have  got  $  1,000  worth  of  personal  property 
on  that  farm  that  could  be  subject  to  taxation?  A.  It  would  bo 
if  I  had  no  debts  to  offset  it;  of  course  that  would  be  it  if  I  had 
no  debts. 

Q.  Do  you  think  debts  should  be  allowed  when  they  come  to 
assess  personal  property?  A.  No,  sir;  I  don't  think  they  ought 
to  be. 

Q.  Do  you  believe  in  assessing  bonds  and  mortgages?  A. 
Yes,  sir. 

Q.  Do  you  also  believe  In  assessing  the  owner  of  the  land 
without  regarding  whether  11  is  incumbered  or  not  as  to  its  full 
value?  A.  I  would  be  in  favor  of  exempting  indebtedness  on 
real  estate  providing  you  could  get  enough  to  assess  on  to  raise 
your  taxes,  but  if  it  was  allowed  on  real  estate,  there  would  be 
very  little  real  estate  assessed,  just  the  same  as  personal  now; 
consequently  I  would  not  be  in  favor  of  it,  but  I  would  be  in 
favor  of  assessing  everything,  real  and  personal,  without  exempt- 
ing debts. 

Q.  In   other   words,    if   your   equity   in   your   farm    was   only  I 
$3,000,  and  you  had  a  mortgage  for  the  balance,  do  you  think  I 
you  should  be  assessed  for  $3,000  or  the  full  value?    A.  If  you  I 
could  get  $3,000;  I  think  you  ought  to  exempt  indebtedness  on 
real  estate,  but  you  would  not  have  anything  to  assess  I  am 


391 

afraid;  I  think  it  would  be  just  but  not  practical,  but  I  think  it 
would  be  practical  to  equalize  the  thing  by  assessing  all  prop- 
erties, personal  and  real,  without  exempting  either  for  debt. 

By  Mr.  Guenther. 

Q.  Take  Buffalo,  for  instance,  a  man  owns  a  thirty-foot  lot 
100  feet  deep  and  has  a  little  cottage  on  there  that  cost  him 
perhaps  $700  or  $800,  and  he  pays  about  twenty-two  dollars  to 
twenty-five  dollars  annually  for  a  tax;  you  only  pay  ninety -five 
dollars  for  150  acres;  where  do  you  think  the  unfair  discrimina- 
tion conies  in?  A.  He  don't  pay  that  on  county  and  State. 

Q.  City,  county  and  State  the  same  as  you  pay  your  tax?  A. 
That  is  a  city  tax. 

Q.  Isn't  it  just  as  burdensome  for  him  to  pay  that  on  a  little 
lot  as  it  is  for  you  to  pay  ninety-five  dollars  on  150  acres?  A. 
I  suppose  it  is,  but  still  he  gets  the  privilege  of  living  under 
the  benefit  of  those  taxes. 

Q.  For  instance,  what?  A.  Stone  pavements  to  walk  over  the 
streets  and  to  drive  over. 

Q.  What  good  is  that  to  a  man  who  don't  own  a  horse?  A. 
It  is  better  to  walk  on. 

By  Mr.  Gifford. 

Q.  Wouldn't  the  taxation  of  all  the  personal  property  in  the 
city  of  Buffalo  relieve  him  of  a  portion  of  the  tax  on  that  real 
estate?  A.  Yes,  sir;  I  think  it  would. 

Q.  Have  you  read  the  last  report  of  the  State  board  of  assess- 
ors as  to  how  much  property  is  escaping  taxation  in  the  State  — 
personal  property?  A.  I  don't  knowr  whether  I  have  read  the 
last 

Q.  The  last  report  states  that  4,000,000,000  of  personal  property 
is  escaping  taxation;  suppose  we  could  reach  that,  do  you  con- 
sider it  would  reach  the  taxes  on  every  real  estate  owner;  we 
won't  say  anything .  about  the  farmers;  don't  you  think  that 
would  reduce  the  rate  of  taxation  on  all  real  estate  fully  one-half? 
A.  Yes,  sir;  I  think  it  would;  that  affects  all  kinds  of  tax,  not 
only  the  State,  but  all. 


Q.  Don't  you  think  that  the  farmers  would  be  perfectly  willii 
to  pay  their  tax  on  personal  property  on  the  farms,  provide 
all  other  personal  property  could  be  reached  and  taxed?  A.  I 
know  I  would  personally,  and  I  think  a  majority  of  them  would; 
I  think  they  don't  understand  it. 

Q.  You  stated  something  in  regard  to  the  local  option  tax  law; 
have  you  ever  made  any  examination  of  that  law  or  heard 
it  discussed  to  any  extent?  A.  ATo,  ^r. 

Q.  Do  yon  know  it  is  a  fact  tl  at  the  claim  was  made  in  the 
Kew  York  State  Legislature  last  winter,  that  the  final  effect  of] 
that  bill  would  be  to  exempt  all  personal  property  from  taxation? 
A.  No;  I  didn't  know. 

Q.  The  intent  of  that  law,  as  I  understand  it,  was  to  give  the 
cities  the  power  to  assess  as  they  chose,  and  the  board  of  super- 
visors in  the  counties  as  they  chose;  make  the  basis  whatever 
they  chose,  either  on  personal  or  real,  or  both;  and  the  idea 
would  be  this,  that  in  the  city  it  would  be  natural  that  they 
should  desire  to  exempt  property  with  a  view  to  drawing  capital 
in  the  city;  if  it  was  a  fact  that  the  law  would  have  this  effect, 
what  effect  would  it  have  on  the  outlying  rural  districts?  A.  I 
think  it  would  be  to  diminish  the  value  of  it. 

Q.  Would  you  then  be  in  favor,  if  it  would  have  that  effect, 
rural  districts  to  the  city?  A.  Yes,  sir;  no  doubt. 

Q.  Would  you  then  be  in  favor,  if  it  would  have  that  effeor, 
•of  a  local  option  law;  the  counties  in  which  these  large  cities 
^ire  located  would  naturally  exempt  personal  property  from 
taxation;  if  they  did  so,  what  would  the  capitalists  in  your  county 
say  to  you  if  you  were  in  the  board  of  supervisors;  what  would 
they  say  as  to  that  assessment;  would  they  demand  that  you 
follow  in  the  wake  of  the  others  and  exempt  personal  property* 
in  your  county?  A.  Yes,  sir. 

William  Steele,  called  as  a  witness,  being  duly  sworn,  testified 
as  follows: 

By  Mr.  Hamilton. 

Q.  Do  you  reside  in   Oswego?     A.  Yes,   sir. 
Q.  You  are  a  lawyer?    A.  Yes,  sir. 


393 

And  have  always  been  connected  with  banking  institutions? 
Yes,    sir. 
Q.  And  interested  in  the  insurance  business?    A.  Yes,  sir. 

|.  You  represented  your  county  in  the  Legislature  in  the  years 
179,  1880  and  1881?    A.  Yes,  sir. 

).  You  acted  during  those  years  upon  the  committee  of  tsxa- 
m  in  the  Assembly?    A.  In  1881,  on  the  special  joint  committee. 
>.  In  1881,  you  were  the  chairman  of  the  Assembly  committee 
taxation?    A.  Yes,  sir;  both  years,  1880  and  1881. 
Q.  It  was  in  those  years  that  the  laws  known  as  the  corpora- 
ion   tax    law   and    the  inheritance    law   were   introduced   and 
tended?    A.  Yes,  sir. 

Q.  It  was  in  1881  that  the  advisory  commission  was  appointed 
Jy  Governor  Cornell  in  connection  with  the  subject  of  taxation? 
Yes,  sir. 

Q.  And  that    commission   acted  in  [harmony   with   the    coni- 
ittees  of  the  Senate  and  Assembly?    A.  Yes,  sir. 
Q.  You  necessarily  then  became  conversant  with  the  subject  of 
ition  and  gave  considerable  attention  to  the  examination  of 
question?    A.  Yes,  sir. 
Q.  And  you  took  part  in  the  preparation  and  introduced  several 

affecting  taxation?    A.  Yes,  sir. 
Q.  You  introduced  among  others  one  to  provide  revenue  for 
5  State  by  a  tax  on  savings  banks  and  institutions  for  saving,? 
Yes,  sir. 

Q.  Seven  hundred  and  sixty-four  —  printed  bill  764  of  1881? 
Yes,  sir. 

Q.  Will  you  explain  to  the  committee  what  was  the  purpose  and 
it  would  have  been  the  working  of  that  bill?    A.  These  bills 
j  found  in  the  joint  committee  of  the  Assembly  and  Senate, 
our  idea  of  introducing,  bills  into  the  Assembly,  or  before 
iucing  bills,  was  to  make  the  bills  so  that  every  one  of  the 
litbee  could  support  them  when  they  came  into  the  several 
.,    consequently  we  made  them  just  as  moderate  as  we 
it  possible  to  make  them;    of  course  some  of  them  were 
ided  and  made  stronger  after  they  came  into  the  house;  but 
50 


394 

the  idea  of  this  savings  bank  bill  was  to  place  a  small  tax  upon 
property  protected  by  the  laws  of  the  State,  on  the  principle  that 
all  property  was  protected;  not  the  individuals  but  the  property 
was  protected,  and  that  the  widow  who  had  |300  in  the  savings 
bank,  getting  three  and  one-half  per  cent  or  four  per  cent,  could 
afford  to  pay  a  small  tax  on  her  deposit  just  as  well  as  the  widow 
who  had  a  small  home  could  pay  the  full  tax  both  State,  county 
and  municipal,  that  was  our  idea,  and  we  deemed  it  nothing 
more  than  just,  that  all  of  this  property  should  contribute  a  cej* 
tain  amount  towards  the  government  that  was  protecting  in 
another  point  is  this;  it  was  well  known  by  correspondence  with 
Massachusetts,  Pennsylvania  and  Ohio,  that  the  same  thing  wi 
going  on  in  other  States  as  in  our  own,  that  about  one-half  ai 
least  of  money  in  the  savings  banks  was  put  in  by  parties  who  had 
no  other  place  to  put  it,  and  I  am  satisfied  that  at  least  half  thf 
money  in  the  savings  banks  in  this  State  belong  to  people  who  01 
have  it  there  until  they  can  draw  it  out  and  place  it  in  mort 
people  of  independent  means;  for  an  estate  I  have  over  |2,( 
invested  in  this  city,  that  I  have  put  in  there  during  the  last  thra 
or  four  months,  because  I  had  no  other  place  to  put  it;  I  have  hat 
charge  of  the  estate  for  nineteen  years;  it  could  not  be  dividec 
until  the  young^est  child  came  of  age  and  he  was  only  two  yean 
of  age;  I  know  a  great  many  instances  where  a  large  amount  o 
money  is  put  into  the  savings  banks  that  way  and  it  was  thJ 
intention  to  arrive  at  some  way  to  make  that  contribute  toward, 
the  support  of  the  government. 

Q.  Explain  to  the  committee  what  is  the  practice  as  to  placing 
those  deposits  by  people  of  means?  A.  The  practice  is,  since  the 
have  been  limited  to  $3,000,  to  put  in  $3,000  in  each  bank  the 
can  reach;  for  the  father,  $3,000;  for  the  mother,  $3,000;  for  tb. 
sisters,  $3,000,  and  the  brothers  and  their  uncles  and  their  cousin 
and  their  aunts,  etc.;  that  is  the  practice  throughout  the  Srat< 
they  carry  it  into  the  different  banks;  parties  in  Syracuse,  I  hflfl 
no  doubts,  may  have  money  in  those  banks  and  also  in  Kome. 

Q.  You  determined  that  fully  one-half  of  the  deposits  in  saving 
banks  represented  the  means  of  people  of  independent  wealth 


395 

|&.  Yes,  sir;  people  who  were  amply  able  to  pay  their  proportion 
If  tax. 

Q.  What  did  you  propose  to  tax  them?    A.  We  proposed  to 
them  twenty-five  cents  on  every  f  100  and  make  the  bank  pay 
;;  that  was  drawn  entirely  to  apply  to  large  savings  banks,  over 
),000,  although  the  sense  of  a  majority  of  the  committee  was 
make  it  apply  to  all  saving's  banks;  there  is  not  so  many  that 
ve  $500,000,  but  of  course  with  those  enormous  savings  banks 
New  York,  the  Bowery  and  Dime;   they  thought  they  would 

a  tentative  bill  that  would  start  in  that  way. 
Q.  The  result  would  have  been  simply  to  take  this  tax  out  of  the 

)lus  accumulations?     A.  Yes,  sir. 
Q.  What  were  the  further  provisions?    A.  The  further  pro- 
jions  were  to  compel  banks  to  give  an  account  to  the  State,  and 
the  further  provision  that  if  a  party  was  assessed  on  money 
bank,  if  they  could  say  that  was  all  they  had,  there  should  be 
further  tax  upon  the  personal  property;  the  assessors  should 
:e  a  certified  receipt  from  the  bank  as  evidence  that  they  had 
Id,  and  that  was  what  they  paid  upon  their  property  towards 
te  support  of  the  State. 

Q.  One  payment,  under  the  provisions  of  this  bill,  was  to  release 
from  all  others  ?  A.  Yes,  sir ;  no  double  taxation. 
Q.  You  also  introduced  a  bill,  printed  No.  706,  to  provide  for  the 
ilization  and  to  reduce  taxation  on  real  estate?  A.  Yes,  sir. 
Q.  Explain  to  the  committee  the  purpose  and  effect  of  that 
.?  A.  The  idea  was  that  the  assessor  should  tax  everything 
it  he  could  find,  whether  real  or  personal,  in  his  jurisdiction, 
then  leave  it  to  the  party  in  possession  to  fight  it  out  with 
actual  owner,  or  the  parties  who  might  have  the  claim 
dnst  it,  what  proportion  of  the  tax  each  one  should  pay;  not 
the  State  a  detective,  but  make  those  parties  determine  the 
ig  amongst  themselves. 

Q.  How  did  you  propose  to  bring  about  that  result?  A.  It 
simply  for  the  assessor  to  assess  everything  he  could  find, 
real  and  personal. 


396 

Q.  And  then  to  have  the  party  in  possession  pay  the  tax?  A. 
Yes,  sir;  and  give  him  a  certificate,  showing  the  amount  he  had 
paid,  and  allow  him  to  offset  that  against  the  indebtedness  that 
might  be  upon  the  property,  which  made  the  party  who  held  tt.e 
indebtedness  a  virtual  owner  with  himself. 

Q.  He  could  present  that  as  a  receipt  to  the  owner  of  the 
security  and  claim  a  deduction  to  that  amount  ?  A.  Yes,  sir. 

Q.  Believing  the  mortgagee  from  all  contribution?  A.  Yes, 
sir. 

Q.  For  the  reason  that  the  mortgagor  had  an  allowance  in  the 
reduced  amount?  A.  Yes,  sir;  we  thought  it  was  nothing  moi^j 
than  just  and  proper  that  arrangement  should  be  made,  and  it! 
could  be  made;  I  had  had  instances  where  I  know  that  I  have  I 
been  very  glad  to  loan  money  at  a  lower  rate  of  interest  than  be 
charged  with  any  taxation. 

By  Mr.  Guenther. 

Q.  Supposing  a  local  pavement  or  a  local  improvement  wad  to 
be  put  down  to  cost  f  400  or  $500,  would  you  make  him  pay  the 
same  proportion  of  that?  A.  No,  sir;  that  would  be  municipal; 
that  is  an  increase  of  the  value  of  the  property;  I  would  have 
to  stand  that. 

Q.  Because  owning  the  fee  you  get  the  benefit  of  the  increased 
valuation?  A.  Yes,  sir;  it  is  a  perfectly  proper  agreement  to  be| 
made  between  the  borrower  and  the  lender;  it  has  been  my 
business  for  thirty  years,  has  been  loaning  money,  not  only  in 
the  banking  business,  but  also  for  other  parties;  of  course  I  know 
the  sentiment  that  people  have,  but  as  a  man  and  as  a  citizen  1 
felt  that  any  bill  that  was  presented  here  should  be  carried  out 
under  the  principle  of  the  golden  rule  —  to  do  as  you  would  be 
done  by;  I  am  part  owner  in  the  store  in  the  eastern  part  of  the 
county,  and  I  believe  the  assessor  should  go  into  the  store  and 
assess  me  for  every  dollar  it  is  worth;  we  are  assessed  now  in 
the  town  of  Sand  Banks,  and  there  is  not  another  case  in  the 
countv  where  thev  assessed  in  the  store:  but  if  we  said  to  the 


397 

leople  of  the  village:  Assess  us  full  value  for  your  village,  but 
p  is  unjust  to  assess  us  wEen  it  is  not  done  in  other  localities, 
lecause  they  are  making  us  pay  part  of  the  State  tax. 

By  Mr.  Hamilton. 

I  Q.  What  became  of  this  bill?    A.  It  was  lost  by  a  vote  of  sixty- 

re  to  some  fifty. 
Q.  What  became  of  the  bill  in  regard  to  the  deposits  in  savings 
nks?    A.  I  don't  remember. 
Q.  Did  it  fail  to  pass?    A.  Yes,  sir;  the  New  York  press  made 
great  kick  on  that,  of  course,  because  there  was  heavy  savings 
ks  down  there,  and  had  a  great  tenderness  for  the  widow  and 
an. 

Q.  What  is  your  opinion  as  to  the  reception  of  the  bills  by 
pie  who  are  not  well-off  —  depositors?  A.  I  don't  think  they 
ould  object;  the  tax  on  that  bill  is  only  seventy-five  cents  on 
)0;  we  figured  up  with  the  average  amount  of  deposit  —  it  is 

r  now. 

Q.  We  had  in  evidence  already  that  the  average  deposits  now 
$350?  A.  I  don't  doubt  that;  the  commission  in  the  report 
y  made  to  Governor  Cornell  very  strongly  favored  that  savings 
ilk  tax;  I  remember  I  read  the  report  last  night  before  I  came 
'n;  I  am  sorry  I  did  not  bring  it  down;  they  thought  that  no 
in  this  State  who  had  |300  in  the  savings  bank  was  so  poor 
purse  or  mind  that  they  would  not  be  willing  to  pay  that. 
Q.  Was  there  any  calculation  made  by  you  as  to  the  amount  of 
enue  that  could  be  made  from  such  a  tax.?  A.  I  can  not 
ber. 

By  Mr.  Gruenther. 
Q.  Don't  you  think  it  would  be  a  still  better  proposition  to  tax 
surplus  in  the  savings  banks?    A.  Taxing  the  surplus  in  the 
iks  would  not  be  consistent;  I  don't  know  of  any  principle 
which  we  could  tax  the  surplus  in  the  savings  banks. 
It  is  supposed  to  belong  to  the  depositors  and  they  never 


398 

get  a  cent  of  it?  A.  Then  you  would  want  to  make  it  at  least  one 
dollar,;  you  would  want  to  make  them  sweat;  I  would  add  ths.t 
to  the  bill;  in  addition  to  the  other  tax  I  would  put  a  tax  of  ore 
per  cent  on  the  surplus. 

JJy  Mr.  Hamilton. 

Q.  There  was  also  introduced  an  act  to  provide  further  revenue 
for  the  State,  No.  387,  which  appears  to  have  been  a  substitute 
for  Assf-mbly  bill  690;  will  you  explain  the  provisions  of  that 
bilJ?  A.  This  was  a  pet  of  the  commission;  it  was  suggested  by 
the  commission  and  our  committee  drew  up  the  bill;  the  idea  w«4 
putting-  a  tax  or  a  license  fee  of  twelve  dollars  and  fifty  cents 
annually  on  the  business  of  selling  at  retail  ardent  spirits,  malt 
liquors  or  any  mixture  of  them,  and  on  the  business  of  selling 
malt  liquors  only,  five  dollars  per  annum. 

Q.  A  State  license?    A.  Yes,  sir. 

Q.  In  addition  to  the  local  licenses?    A.  Yes,  sir. 

Q.  What  became  of  that  bill?  A.  That  bill  did  not  receii§| 
very  much  favor;  after  it  got  into  the  house  it  seemed  to  be 
looked  upon  as  a  very  good  thing  to  talk  about  but  not  veiy 
practical  thing  to  carry  out. 

Q.  What  did  you  provide  for  the  collection  of  the  five  dollars 
and  the  twelve  dollars  and  fifty  cents,  where  was  it  to  be  paid?j 
A.  I  think  some  one  was  designated  to  receive  it,  a  commissioner  j 
of  re  venue;  the  commissioner  was  to  pay  it  over  to  the  comptroller.! 

Q.  It  created  a  new  office?    A.  Yes,  sir. 

Q.  You  also  introduced  a  bill   printed  bill  No.  766,  to  provide 
for  the  taxation  of  life  insurance  companies?    A.   Yes,  sir. 

Q.  Will  you  explain  the  provisions  of  that  bill?  A.  I  could] 
not  do  i(  as  concisely  as  I  could  write  it. 

Q.  What  became  of  that  bill?    A.  That  bill,   if  my  meinorj 
serves  me  right,  did  not  pass. 

Q.  You  also  introduced  Assembly  bill,  printed  No.  779,  from  th<, 
special  committee  on  joint  taxation  and  assessment  to  provid*,* 
revenue  for  the  State  by  a  special  tax  on  sales  by  brokers?  A 


399 

'li;i{.  wa.«  a  l»ill  very  strongly  recommended  by  the  commission  and 
Ln<l  also  by  Assessor  Unggs;  I  have  a  personal  letter  from  him  at 
Die  time  at  home,  stating  I  IL  id  ^ot  on  the  right  track  . 
I  Q.  is  that  what  is  known  as  the  bucket  shop  bill?  A.  Xo,  sir; 
it  made  a  stamp  tax  on  the  sale  of  bonds  and  notes  in  New  York 
ity. 

I  Q.  Was  it  confined  to  Neu  York  city?  A.  No,  sir;  it  showed 
h<  enormous  amount  this  stamp  tax  would  receive,  making  a 
-.ore  invalid  unless  it  had  a  stamp  on;  going  right  back  to  1863 
i.nd  ISO i  when  we  used  to  stamp  contracts  and  mortgages,  etc.; 
re  used  to  buy  f  150  or  $200  worth  of  stamps  at  a  time;  I  have 
mie  of  them  still. 

Q.  What  become  of  that  bill?    A.  The  session  was  not  quite 
>ng  enough  for  it. 

Q.  Explain  the  provisions  of  it?  A.  The  provisions  were  to 
Jut  a  stamp,  two  cents  for  each  $100  the  same  as  we  used  to 
ive  on  our  receipts;  I  didn't  like  that  bill  very  well,  but  at  the 
te  time  it  was  parties  thac  seemed  to  know  more  about  it  than 
did,  who  claimed  it  would  bring  in  large  amounts  of  revenue 
id  not  injure  any  one  in  pavlicular;  but  those  that  went  through 
jtith  it  as  I  did  and  stamped  all  those  things,  would  say  let  us 
iv  for  the  whole  thing  at  once;  we  don't  like  that  class  of  busi- 
we  would  rather  pay  a  direct  tax  than  be  bothered;  but 
ley  claimed  this  was  the  only  way  you  could  reach  those;  we 
id  another  bill;  I  have  a  ^opy  of  it  at  home,  where  the  broker 
to  pay  a  license  of  twenty-five  dollars  and  then  he  was  to 
>rt  all  those  sales;  well,  that  would  be  so  much  worse  than 
;  you  would  have  had  to  provide  a  new  department  and  take 
of  it. 
Q.  That  bill  was  a  substitute  for  Assembly  faill  No.  724  which 

introduced  by  yourself?    A.  Yes,  sir. 
'!  Q.  You  also  offered  from  the  joint  committee  on  assessment 
taxation,  Assembly  bill  printed  No.  261,  an  act  to  equalize 
ition?     A.  Yes,  sir. 
Q.  Explain  to  the  committee  the  purpose  and  effect  of  that 


-      400 

bill?  A.  This  was  a  T»ill  presented,  and  ruy  dairy  says  it  was 
unanimously  voted  favorably  by  the  committee,  upon  taxing  the 
bonded  indebtedness  of  municipalities  and  I  think  there  never 
was  a  more  just  bill  or  one  that  would  create  less  friction  pre- 
sented to  the  Assembly,  or  any  legislative  body,  than  this  veiy 
bill,  but  the  trouble  was  with  a  good  many  of  those  bills  —  April 
twentieth,  you  see  the  date  of  that;  it  came  in  about  the  time 
we  were  having  quite  a  little  contest  that  kept  us  very  nearly 
the  last  of  July,  and  those  bills  suffered  terribly;  there  were 
parties  that  would  fight  against  their  own  grandmother  because 
they  happened  to  be  on  the  other  side;  it  was  the  old  Senatorial 
fight. 

Q.  That  bill  provided  similar  to  another  bill  that  you  have 
called  our  attention  to,  that  a  tax  might  be  paid  by  the  municipal- 
ity and  then  would  be  regarded  as  a  valid  setoff?  A.  Yes,  sip; 
there  is  a  loud  call  in  this  State  for  a  bill  of  that  kind;  I  don't 
think  there  is  any  subject  of  taxation  that  could  stand  it  better 
than  bonds  that  were  issued  twenty  years  ago,  now  drawing 
seven  per  cent  interest  and  not  paying  a  cent  of  tax. 

Q.  Could  you  tax  a  bond  issued  ten  or  twenty  years  ago?    A. 
It  was  taxed  then;  we  are  only  enforcing  it;  in  reference  to  that 
question,  of  course  I  have  had  those  objections;  when  those  bonds > 
were  issued  they  were  a  subject  of  taxation;  this  bill  was  simply j 
to  collect  the  tax  that  they  owed  this  State  just  as  much  as  IJ 
owe  a  tax  on  my  house  and  lot;  it  is  a  copy  of  an  extract  of  the! 
Albany  Evening  Journal;  the  old  man  was  very  much  interested! 
in  those  matters,  and  they  used  to  give  quite  a  little  space  ini 
the  Evening  Journal  to  those  bills  and  this  was  taken  from  the 
paper  and  sent  broadcast  through  the  State  at  that  time;  thej 
plan  of  the  bill  was  this;  here  was    a    town  that  was  assessed 
for    |700,000    and    bonded    for    f 80,000;    that    is    the    town    ol 
of  Sandy  Creek  in  Oswego  county;  of  course,  you  people  of  the  tuwr 
taken  up  and  they  had  nothing  left  them  on  which  to  levy  this 
$80,000;  now,  that  $80,000  They  were  paying  seven  per  cent  or! 
when  the  legal  rate  was  six;  they  could  not  get  at  it;  they  were! 


lying  their  own  taxes  and  this  was  going  scot  free;  the  idea 
to     have     the     assessor     add     |80,000     to     the     assessed 
valuation    of    the    town;    then    assess    the    whole    $780,000;    I 
mid    write    it    better    because    I    figured    this    thing    out    at 
tat  time;   there  is  nothing  unconstitutional   about  it,  because 
lose     bonds     were     taxable     and     should     have     paid     their 
from  th*e  very  inception  of  the  business;  they  simply  escaped;: 
?hen  we  say  we  are  passing  a  law  to  tax  those  bonds  we  are  notr 
it  providing  a  method  to  gather  the  tax  already  provided  for; 
understand  the  laws  of  Switzerland,  when  a  man  dies  his 
>perty  is  all  appraised;    the  appraisers  then  figure  over  the 
estate;   they  take  his  books  and  figure  back  and  see  how 
inch  he  has  defrauded  the  government  for  years  back;    they 
ten  assess  him  the  amounts  he  should  have  paid  from  year  to 
and  five  per  cent  is  the  penalty,  which  is  one  of  the  most 
arrangements  ever  originated;   they  make  him  pay  what  he 
Id  have  paid;    of  course  the  parties  are  sworn  every  year; 
len  the  man  dies,  they  seize  upon  it;  they  figure  back  how  much 
should  have  paid  in  1880  or  1881,  and  charge  to  the  estate 
also  charge  five  per  cent  as  a  penalty  besides;    now  that 
:es  everybody  in  Switzerland  pay  his  tax,  and  it  should  be  done 
this  country  too. 

Q.  This  bill  is  in  line  with  the  recommendation  of  the  Comp- 
iler for  the  taxation  of  corporations?  A.  Yes,  sir;  with  one 
option;  in  the  operation  of  this  bill  in  1880  we  were  defeated 
luse  a  great  many  of  those  corporations  claimed  that  the  bill 
not  reach  them,  so  that  in  1881  they  amended  it  so  that  it 
Id  reach  them;  and  we  added  a  saving  clause  Whereby  we 
Id  get  the  tax  of  1880. 
Q.  What  are  your  views  upon  the  question  of  the  listing  system? 
It  has  too  much  friction  about  it. 

In  what  respect?    A.  I  think  there  is  nothing  that  would 
the  ire  of  a  free  born  American  citizen,  or  even  an  acclimated 
more  than  the  listing  system;  in  Ohio  where  they  have  the 
system  some  claim  it  is  a  benefit,  and  others  claim  it  is  a 
51 


402 

great  injury;  there  is  too  much,  espionage;  too  much  coming  down- 
to  the  secrets  of  a  man's  business,  that  he  will  avoid  even  if  h>» 
iias  to  swear  to  a  lie  —  too  inquisitorial. 

By  the  Chairman. 

Q.  A  man  may  be  willing  to  tell  you  as  to  his  condition  in  a:a- 
oral  conversation,  but  he  don't  want  to  make  a  record  of  what  he 
says?  A.  I  saw  so  much  of  that  in  the  income  tax,  and  in  the 
internal  revenue;  there  was  so  much  pressure  in  this  State  and 
everywhere  in  the  Union. 

Q.  Such  a  law  would  not  have  the  sympathy  of  the  people! 
A.  No,  sir. 

By  Mr.  Hamilton. 

Q.  What  are  your  views  upon  the  present  law,  allowing  a  d< 
tion  for  indebtedness  as  an  offset?    A.  It  is  very  unjust  becai 
it  don't  apply  to  real  estate;  you  have  just  as  much  right  to  takjjj' 
indebtedness  off  my  real  estate  as  you  have  on  personal  property. 

Q.  Were  you  asked  in  regard  to  your  views  on  the  question  of 
the  present  rate  of  interest?    A.  I  was  not. 

Q.  From  your  experience  as  a  banker  and  otherwise,  will  youl 
give  your  views  on  that  question?    A.  My  idea  may  not  be  aji 
very  popular  one,  but  it  would  be  not  to  interfere  for  the  present! 
with  the  rate  of  interest;    when  the  interest  was  reduced  from,, 
seven  to  six  per  cent  my  ideas  were  all  borne  out  by  the  results  r 
afterwards,  and  I  don't  know  why  the  same  results  should  not,, 
follow;  when  you  reduced  the  interest  in  1879  from  seven  to  sb... 
per  cent  I  opposed  it  for  quite  a  while  and  quite  a  number  of  us 
opposed  it,  and  having  been  in  the  banking  business  and  loaning  | 
money  at  that  time,  of  course  I  had  quite  a  number  of  peopl<  . 
that  believed  the  same  as  I  did;    my  views  were  these,  that  i 
would  not  be  any  especial  benefit  to  the  people  who  had  propert;, 
that    was    not    gilt    edged;     whether    certain    lines    of    boi 
rowers     who     need     money     it     is     difficult     to     get     monej 


HIT 

403 

ithout   paying   what    is   called   a   shave   on   it;     and   also   a 
irge  amount  of  money  would  be  taken  out  of  mortgages  and 
at  into  speculation,  buying  stocks  or  sending  it  into  western 
linns,  Kansas  and  Nebraska  mortgages;   we  finally  compromised 
p  patting  it  off  until  the  first  of  January  following-;  the  original 
II  was  to  take  effect  immediately;  Sherrott,  who  had  charge  of 
o  bill  in  the  Assembly,  on  consultation  with   the  gentleman 
tho  had  charge  of  it  in  the  Senate,  finally  agrxed  tc.  put  it  off 
|itil  next  January,  and  the  bill  was  passed,  and  T  found  my 
ws  to  a  large  extent  were  correct;  about  that  time  they  com- 
nced  sending  money  west;  for  several  years  afterwards  stocks 
nt  up  throughout  the  country;  people  were  investing  money 
stock;  any  stock  that  offered  to  pay  seven  per  cent  or  eight 
r  cent  was  sought  by  those  people  who  felt  they  had  been 
ured;  I  also  found  that  those  people  who  needed  money  badly 
uld  not  get  money  without  paying  a  large  shave,  and  you  your- 
f  have  seen  the  result;  it  was  about  that  time  that  so  much 
mey  went   into   those  western  mortgages,   and   even   at  the 
•sent  rate  of  interest  in  Oswego,  we  had  an  experience  that 
t  the  city  of  Oswego  f  75,000  to  f  100,000,  in  the  Winner  Invest- 
nt   Company;   some  widows,   I  understand,   had   as  high   as 
,000  or  $5,000  in  bonds;  the  loaning  of  money  is  a   subject 
t  is  very  apt  to  control  itself;  if  money  is  plenty,  a  party  with 
d    security  can  get    money  at    almost  any  price;  A   No.  1 
urity  to-day  you  can  get  money  at  five  and  even  at  four;  I 
ow  a  block  in  Oswego  that  was  sold  two  years  ago  and  a 
rtgage  put  on  it  at  five  per  cent  with  the  privilege  of  pacing 
sooner;  last  year  it  was  put  into  four  per  cent,  but  it  is  gilt 
it  is  as  certain  almost  as  if  it  was  pure  gold;  I  find 
ughout  the  country  plenty  of  people  who  want  to  borrow 
fcney,  but  the  rate  of  interest  at  six  per  cent  even  now,  and 
IB  fear  of  usury  keeps  a  good  many  of  those  people  from  getting 
•mey;  if  the  interest  was  reduced  to  five  per  cent  after  a  while 
IB  good  securities  would  get  it  for  four  per  cent,  but  there  would 
|  the  same  disposition  with  people  who  have  money  to  loan, 


404 

whether  it  is  the  rich  man  or  the  poor  widow;  in  fact  the  poor 
widow  is  anxious  to  get  the  largest  rate  and  take  the  most 
chances,  and  those  are  the  people  who  are  being  swindled  through- 
out the  country,  and  will  be  as  long  as  the  world  stands,  because 
they  don't  learn  anything  by  their  past  experience;  as  Napoleon 
said  about  the  Bourbons:  "They  forget  nothing  and  learn 
nothing; "  directly  it  is  a  matter  of  no  interest  to  me  whatever; 
if  it  will  help  the  people  throughout  the  country,  help  parties 
who  are  anxious  to  get  money  to  go  into  business  and  help  them 
to  carry  on  their  farms,  or  pay  up  their  mortgages  on  their  place; 
it  seems  to  me  that  one-half  of  one  per  cent  a  month  is  as  low  as 
people  can  afford  to  do  it;  there  are  a  large  number  of  people 
in  this  country  who  have  nothing  but  their  interest  to  live  oaj 
and  just  as  fast  as  the  interest  is  cut  down  just  so  fast  theiii 
means  of  support  are  cut  down;  I  don't  know  but  you  gentlemen! 
may  have  heard  a  great  call  for  lowering  the  rate  of  interest 
but  I  am  loaning  money  all  the  time;  I  don't  do  anything  else 
for  estates,  and  I  have  not  found  any  call  for  a  lower  rate  o 
interest. 

Q.  What  are  your  views  upon  what  is  now  the  inheritance  ta> 
in  regard  to  the  question  of  increasing  it  by  imposing  a  grader 
tax?  A.  My  views  are,  I  should  let  it  alone  until  the  thing  ha* 
been  thoroughly  tried;  I  think  there  are  other  means  of  obtaining 
money  to  carry  on  the  government  that  have  not  been  properl> 
worked,  so  as  to  let  them  get  thoroughly  settled  and  let  tht 
system  get  more  thoroughly  digested. 

Q.  You  are  not  opposed  in  principle  to  the  i  ID  position  of  sucl 
a  tax,  but  deem  it  not  appropriate  at  the  present  time?  A 
That  is  my  idea;  we  are  starting  on  something  entirely  n 
throughout  the  country;  in  some  cases  it  may  perhaps  mak< 
hardships;  we  ought  to  have  had  this  in  years  gone  by;  we  ar» 
simply  getting  what  we  should  have  had  before;  that  is  the  poin 
I  have  in  both  collateral  and  direct  inheritance  tax;  the  Stat 
is  deriving  some  contribution  for  support  given  to  those  estates 


4:05 

in  times  gone  by  which  should  have  paid  year  after  year,  the 
same  as  real  estate  and  tangible  property  has  to. 

Q.  Estates  that  amount  to  less  than  flO,000  in  personal 
property  we  are  not  receiving  any  benefit  from?  A.  That  is  only 
$500  a  year;  that  limit  is  low  enough  it  seems  to  me;  if  that 
|10,000  was  left  to  children,  or  if  it  is  left  to  a  widow,  if  she  pays 
her  taxes  on  that  after  it  comes  into  her  hands,  as  she  should  do, 
and  the  law  should  be  made  to  make  her  do,  that  is  all  she  ought 
|  to  do ;  I  believe,  as  far  as  possible,  in  making  this  assessment,  but 
make  each  one  pay  a  little,  but  not  to  distress  any  one;  I  look 
upon  all  money  the  same  as  I  do  upon  property,  for  what  it  would 
bring  in  for  trade  and  barter;  there  is  nothing  else  to  go  on;  if 
there  was  a  war  I  would  be  willing  to  pay  a  couple  of  dollars  more 
[on  my  watch,  as  I  did  in  1863  or  1864,  but  it  is  not  necessary. 

Q.  Would  it  be  in  line  with  your  views  to  make  all  pay  the 
Jsame  proportion  —  tax  real  as  well  as  personal  property  under 
ithe  inheritance  law?    A.  Yes,  sir;  make  every  class  of  property 
ty  something;  it  seems  to  me  that  would  be  open  to  this  objec- 
—  that  the  real  property  has  been  paying,  very  likely,  because 
it  is  the  only  property  you  can  get  at;  if  I  was  going  to  introduce 
bill  I  don't  think  I  would  favor  a  tax  upon  real  estate,  because 
re  know  that  is  paying  if  anything  is  paying;  we  know  there  are 
ly  quantity  of  classes  of  property  that  are  paying  nothing,  and 
ive  been  for  a  great  many  years;  it  would  seem  to  me  more  in 
ie  province  of  legislators  to  arrive  at  some  means  of  compelling 
just  contribution  from  those  branches  of  industries  and  proper- 
is  that  have  not  been  paying. 
Q.  You  were  one  of  the  originators  of  the  collateral  inheritance 

laws?     A.  Yes,  sir. 

Q.  Wasn't  that  law  passed  upon  a  broader  principle  than  the 
iere  attempt  to  collect  from  personal  property  on  account  of  its 
ivious  evasions?     A.  The  principle,  of  course,  was  the  prin- 
)le  of  equity,  but  that  was  one  of  the  points  brought  and  very 
mgly  argued,  that  it  liad  escaped  for  years,  and  that  »vas  the 
ly  way  to  get  at  it. 


406 

Q.  Wasn't  it  the  principle,  since  sustained  by  the  court,  that 
the  right  of  succession  was  created  by  the  law;  there  was  :ao 
natural  right;  the  right  to  devise  and  give  by  will  was  also  a 
creation  of  the  law,  and  that  therefore  the  law  had  a  right  to  tak€ 
a  percentage  for  the  support  of  government?  A.  I  think  if  thai 
idea  had  been  advanced  I  should  remember  it;  no  such  idea  was 
ever  advanced  in  our  committee,  because  if  I  was  not  there  there 
was  no  committee ;  we  had  to  amend  the  corporation  law  bj 
putting  in  the  words  "upon  their  corporate  franchise  and  bus! 
ness ; "  it  was  simply  splitting  hairs. 

Q.  Assuming  it  is  that  broad  principle  which  controls,  woulc 
there  be  anything  unfair  in  asking  in  the  distribution  of  th« 
estate  —  of  the  assets  largely  invested  in  real  estate  —  some  con 
tribution  as  well  as  from  the  estate  of  Mr.  Gould,  which  is  large] 
in  personal   property?    A.  As  I  understand  the  estate  of  th 
Astors,  it  is  nearly  all  real  estate;  holding  property,  and  the] 
leasing  the  property  and  having  buildings  put  upon  it;  that 
what  I  understood  in  1858  and  1859,  when  I  lived  in  New  York; 
suppose  that  is  all  taxed,  and  taxed  as  thoroughly  as  other  classe 
of  property  that  was  there  to  be  taxed ;  not  that  property  Has  pai 
its  taxes  from  the  time  it  came  into  the  hands  of  the  Astors,  h 
has  paid  this  tax  the  same  as  the  other  property,  but  when  you  g 
to  personal  property  you  are  striking  a  class  that  never  has  paid 
tax;  bring  out  the  Swiss  idea,  and  commence  and  pay  now. 

Q.  I  asked  you  to  assume  that  the  inheritance  tax  was  base* 
upon  the  principle  I  had  stated,  which  has  been  sustained  by  th; 
courts,  would  it  not  be  fair  then  that  real  estate  shall  contribut 
the  same  share  proportionately  with  the  estate  of  any  person  wh 
had  invested  in  personal  property?  A.  Yes,  sir;  to  follow  out  tha 
theory,  but  I  don't  believe  in  the  theory;  I  don't  think  the  theor 
is  correct. 

Q.  Gould  the  other  theory  be  sustained  in  law  as  a  theory  ? 
Yes,  sir:  I  think  so. 

Q.  The  theory  that  you  are  getting  even(?  A.  It  is  not  gettiB 
even;  it  is  only  taxing  now  what  we  should  have  taxed  long  ag* 


407 

Q.  Is  it  not  a  theory  that  you  did  tax  years  ago,  but  did  not 
collect  it?  A.  Nothing  is  taxed  unless  it  is  assessed;  it  was  sub- 
ject to  taxation. 

Q.  And  it  evaded  it?    A.  Yes,  sir. 

Q.  And  for  that  reason  you  propose  now  to  get  even?  A.  I  think 
it  is  perfectly  just  too;  I  think  it  is  [Republican-Democratic 
principles;  there  is  no  doubt  about  it  at  all;  the  Swiss  government 
has  followed  that  for  years,  and  that  thing  would  certainly  have 
been  decided  there  if  it  had  been  unconstitutional. 

Q.  They  are  not  acting  under  the  same  constitution  that  we  are? 
A.  No,  sir ;  but  on  the  same  principle  all  the  way  through ;  there  is- 
little  difference  in  the  way  of  officering  their  government. 

Q.  Was  not  that  ground  you  gave  rather  used  as  an  argument 
to  induce  support  rather  than  to  sustain  the  reason  why  the  tax 
was  imposed?  A.  We  had  the  worst  quibbler  of  all  the  lawyers 
I  ever  saw;  I  might  say  worse  in  one  sense  and  best  in  another; 
that  was  George  H.  Foster,  and  even  his  fertile  brain  didn't  bring 
that  up;  his  idea  was  that  property  should  be  taxed  by  the  State, 
and  that  the  State  had  a  right  to  tax  that;  they  taxed  it  one  year 
anyway  whether  they  ever  get  it  again  or  not. 

Q.  If  you  learned  that  was  the  theory  upon  which  it  had  been 
sustained  by  the  various  courts,  and  the  theory  upon  which  it 
was  advocated  in  other  countries,  would  that  change  your  views? 
A,  Certainly  it  would' change  my  views  in  a  legal  way  as  a  lawyer, 
but  it  would  not  change  my  individual  views. 

Q.  Wouldn't  it  give  you  an  idea  that  it  would  be  equitable  to  lay 
a  tax  upon  both  classes  of  property?  A.  Yes,  sir;  followed  out  in 
that  view, 

Q.  Have  you  any  other  views  to  suggest  to  the  committee  in 
regard  to  the  subject  of  taxation  to  which  your  attention  has  not 
been  calied?  A.  Xo;  I  don't  think  that  I  have;  I  think  the  ques- 
tions on  those  bills  and  upon  the  general  subject  of  taxation,  is,. 
as  far  as  I  can  think  of  at  present. 

Q.  Would  you  favor  the  plan,  raising  all  the  money  for  State 
purposes  by  a  specific  tax  and  relieving  the  counties?  A.  Yes,  sir;. 
by  all  means. 


J 


408 

Albany,  N.  Y.,  January  24, 

The  committee  met  in  the  Senate  Chamber,  Albany, 
to  call. 

Nathaniel  Gr.  Spalding,  called  as  a  witness,  being  duly  swoi 
testified  as  follows: 

By  Mr.  Hamilton: 

Q.  What  is  your  full  name?     A.  Nathaniel  Gr.  Spalding. 

Q.  Where    do   you   live?       A.    Schodack   Landing,    Eenssel 
county. 

Q.  What  is  your  business  ?     A    Farmer. 

Q.  How  long  have  you  been  engaged  as  a  farmer9    A.  So 
twenty  years  and  over. 

Q.  Are  you  also  a  member  or  the  Farmers'  League?     A.   ¥ 
sir. 

Q.  An  officer  of  that  body?    A.  Yes,  sir. 

Q.  What  office  do  you  hold?    A.  Lecturer. 

Q.  How   long   have   you   been   so   engaged?     A.  About    thr< 
years. 

Q.  Have  you  also  held  public  office?     A.  Nothing  very  mil 
no,  sir. 

Q.  One  that  has  called  you  in  connection  with  the  levy  and 
collection  of  taxes?  A.  Nothing  n  ore  than,  a  matter  of  my  own 
town;  my  own  town  matters. 

Q.  In  your  town  matters  you  have  given  attention  to  that  sub- 
ject? A.  Yes,  sir. 

Q.  Have  you  also  given  attention  to  the  subject  of  taxation? 
A.  Yes,  sir. 

Q.  In  connection  with  your  relations  to  the  State  League?  A. 
Yes,  sir. 

Q.  What  have  you  to  say  as  to  the  propriety  of  modifying  ihe 
present  laws  relating  to  taxation,  assessment  and  interest,  so 
far  as  they  affect  the  agricnlhiml.  manufacturing  and  other 
business  interests  of  the  Stafv?  A.  I  think  they  sh.mld  be 
-much  modified. 


.roe 

: 

^^A 


409 

Q.  Will  you  give  the  committee  what  information  you  possess 
in  regard  to  that  subject,  and  specify  wherein  you  believe  a  modi- 
fication is  warranted?  A.  I  will  state  that  as  farmers  we  take 
the  ground  that  equal  taxation  is  just  taxation;  and  as  far  as 
we  can  reach  that  we  think  we  have  reached  a  poiixc  of  justice: 
we  feel  this  as  farmers  that  our  present  system  of  taxation  works 
very  injuriously  to  the  farmers  especially;  in  the  first  place,  you 
take  our  mortgaged  real  estate;  we  are  paying  a  double  tax,  and 
I  think  it  is  fair  to  say  that  nearly  one-half  of  the  roal  estate  of 
the  State  of  New  York  is  mortgaged;  there  is  hardly  a  poor  man's 
house  but  what  is  mortgaged,  and  lie  is  paying  a  double  tax. 

Q.  Do  you  believe  that  that  is  the  rule  also  in  the  case  of  farms? 
A.  Yes,  sir;  particularly  so  with  farms. 

Q.  Fully  one-half?  A.  Yes,  sir;  of  course  I  can  not  gi'/e  you 
exact,  but  as  far  as  I  can  ascertain  I  think  that  half  of  the 
farms  of  the  State  of  New  York  are  mortgaged;  now  you  see  the 
[point;  the  assessor  conies  to  a  farmer,  and  he  says:  *'How  much 
) is  your  farm  worth?  "  «  Well,  it  is  worth  $10,000; "  "  Well,  then, 
I  will  tax  you  10,000; "  but  the  former  says:  "I  have  got  a  mort- 
gage of  $5,000,  and  I  have  got  also  a  debt  that  I  have  in  making 
[improvements  of  $1,000  more;  1  actually  owe  6,000  on  my  farm;" 
j "  I  can  not  help  that,"  the  assessor  says ;  "  you  must  be  taxed  for 
I  the  whole  face  of  it; "  he  goes  to  a  merchant,  and  he  says:  "  How 
much  goods  have  you  got  in  your  store?"  "I  have  gjt  $5,000;" 
"Well  ]  will  tax  you  $,000;"  "No,"  the  merchant  says,  u  I  owe 
if  2,500  on  this  stock  of  goods; "  "Well,  I  will  take  it  out,''  and  the 
[merchant  is  taxed  $2,500,  and  we  poor  farmers  pay  the  whole  tax 
>n  the  $10,000  while  we  only  own  four;  those  are  living  facts;  now, 
;the  point  is  here;  of  course  the  farmer  lives  on  a  very  narrow 

irgin;  he  makes  but  very  11  r tie  profit;  probably  the  average 
j  farmer  does  not  make  three  per  cent  on  his  farm;  he  is  close 
; always,  and  $100  is  a  good  ue.n.1  to  him;  fifty  dollars  is  a  great 
ideal  to  him,  or  thirty  dollars  is  a  good  deal  to  the  fanner;  it  is 

it  the  margin  between  profit  and  loss  with  the  farmer;  lie  is  so 
54 


410 


near  that  it  is  just  between  solvency  and  insolvency,  that  thirty  or 
fifty  dollars  is  to  that  farmer;  what  is  the  point?  That  thirty 
dollars  don't  amount  to  a  great  deal,  we  will  say;  yet  what  is  th» 
fact?  It  depreciates  the  value  of  that  farm  just  so  much;  I  will 
give  you  an  illustration;  my  farm  forty  years  was  taxed  fifteen 
dollars. 


any 


By  the  Chairman: 

Q.  An  acre?    A.  No,  sir;  the  whole  farm;  nobody  paid  ai 
taxes  forty-five  years  ago. 

Q.  How  many  acres?    A.  Now  250. 

Q.  How  many  did  you  have  at  that  time?  A.  The  same  amount; 
now  I  pay  $140,  and  that  farm  wouldn't  sell  to-day  under  fore- 
closure than  it  would  forty  years  ago. 

Q.  You  mean  the  .total  tax  forty-five  years  ago  was  fifteen  del- ; 
lars?    A.  Yes,  sir;  that  is  including  my  school  tax;  it  is  now  $140; 
I  can  pay  $140  we  will  say,  although  it  conies  pretty  hard;  you 
gentlemen  ^ay  to  me  what  is  $140;  it  is^$125  more  than  it  was 
forty  years  ago;  what  does  that  represent;  it  represents  a  capital 
at  five  per  cent  of  $2,500,  and  my  farm  with  that  $140  drawn  off 
back  to  fifteen  dollars  would  be  worth  $2,500  more  than  it  i» 
to-day,   and  so  would  yours  or  any  other  man's;  there  is  the 
point;  it  is  the  depreciation  of  our  real  estate  that  we  are  looking! 
after;  now.  suppose  a  merchant,  a  banker  or  a  manufacturer,  II 
don't  care  who,  if  he  has  got  personal  property,  suppose  he  paid! 
his  phare  with  me,  what  would  be  the  result;  I  contend  we  would j 
go  right  bark  down  to  fifteen  dollars;  I  think  I  can  demonstrate! 
ti)  you  to-day  that  while  we  are  paying  two  per  cent,  if  the  tax}. 
was  equalized  and  placed  on  all  classes  of  property  our  tax  would r 
be  five  mills;  can't  the  banks  stand  that;  can  not  the  savings' 
banks  pay  nve  mills  on  an  average;  we  don't  ask  those  men  tc; 
pay  two  per  cent;  I  don't  ask  them  to  do  it,  bat  we  say  th» 
should  come  down  fairly  and  squarely  on  all  the  personal  propnt? 
of  the  State  of  New  York,  and  it  would  be  only  five  mills;  anybodi  .< 
can  stand  that:  now  what  other  facts  —  what  are  the  facts;  th< 
facts  are  those  as  near  as  I  can  learn;  our  State  Assessors  tel  ' 


•ill 

us  that  there  are  4,000,000,000  of  personal  property  imtaxed;  our 
real  estate  is  taxed,  I  believe,  about  3,500,000,000;  now  we  con- 
tend, and  we  think  we  can  demonstrate  the  fact  that  the  actual 
wealth  —  the  taxable  property  of  the  State  of  New  York,  if  you 
take  everything:  is  12,000,000,000;  we  don't  know  anything  about 
this  wealth,  Mr.  Chairman  —  there  is  over  1,000,000,000  of  dia- 
monds and  gold  and  jewels  in  the  safe  deposits  of  New  York  city 
that  never  see  the  eye  of  an  assessor;  we  poor  fellows  back  in  the 
country  pay  for  everything  that  is  in  sight;  you  see  the  difference? 

Q.  Are  TOU  sure  that  is  so  —  that  last  statement?  A.  I  think. 
I  am;  J  have  been  told  so. 

Q.  (Jo  ahead.  A.  The  assessors  never  go  there  to  the  safe 
deposits;  now  just  look  at  it,  we  are  paying  a  tax  on  our  farm 
lands  —  an  excessive  tax;  take  the  property  of  New  York  city, 
and  that  city  is  an  exception  to  all  rules;  it  is  growing  beyond  all 
accounts;  r»o  matter  what  you  do;  no  matter  how  corrupt  your 
laws  are,  real  estate  booms  there  if  it  does  not  anywhere  else; 
it  does  not  here  in  the  city  of  Albany  with  its  wonderful  capitol; 
real  estate  sells  to-day  here  and  has  for  the  last  three  years  for 
less  than  its  assessed  value;  you  can  not  sell  property  on  the 
market;  why;  it  is  overtaxed  and  personal  property  is  free;  you 
go  to  a  man  and  ask  him  if  he  wants  a  farm  or  a  lot  and  he 
says  no. 

Q.  What  is  the  taxation  in  the  city  of  Albany?  A.  I  think  it 
is  about  LSO  or  1.81;  if  we  tax  personal  property  in  New  York 
city  and  in  Albany  and  in  all  our  cities  5,000,000  it  would  bring 
it  down  to  n  basis  equal  to  all;  we  contend  that  this  lot  of  money 
hid  around  —our  millionaires  live  simply  nomadic  lives;  with 
their  millions  in  their  saddle-bags  they  start  and  go  from  one  State 
to  another  whenever  there  is  any  sign  of  taxation;  do  we  want 
any  such  class  of  men;  our  success  as  a  nation  depends  upon  a 
system  of  legislation  that  makes  it  for  the  interest  of  every  man 
to  have  a  home  —  to  build  up  a  fireside;  that  is  what  makes  a 
great  country;  how  are  we  to-day;  the  millions  are  in  the  saddle- 
bags going  around  over  the  country  to  avoid  taxation ;  the 
millionaire,  as  a  rule,  is  a  consumer  and  not  a  producer. 


4:12 

Q.  To  get  back  to  the  question;  \vliat  remedy  do  you  sugg( 
for  that  alleged  evil?  A.  I  am  reaching  a  point  of  great  interest: 
I  am  in  favor  of  a  listing  bill;  I  will  tell  YOU  why;  I  believe  thai 
there  is  and  that  there  has  been  patriotism  enough  in  the  Stai 
of  Xew  York  when  a  law  is  once  passed  to  carry  out  the  system 
listing;  I  wo  aid  exempt  say  $2,000,  so  that  a  lawyer  would 
exempted  on  his  books,  a  doctor  on  his  library,  a  poor  man  01 
his  tools  and  a  farmer  for  his  tools;  all  above  that  a  man  is  able  to 
pay  on;  then  tax  it  about  five  mills,  which  would  be  probably 
enough;  I  believe  a  system  of  listing  would  reach  it  honestly 
and  squarely;  we  are  told  if  you  start  a  listing  system  a  man 
will  commit  perjury;  I  don't  believe  it;  I  don't  believe  there  is  a 
man  in  this  room  that  would  commit  perjury;  that  is  simply  a 
cry  raised  by  the  objectors;  I  remember  some  years  ago  of  seeing 
a  cartoon  that  illustrates  this  forcibly  to  me;  it  was  Mr.  Twe< 
in  his  prime  represented  as  a  great  giant;  a  little  policeman  as 
pigmy  stood  by  his  side  and  held  his  baton  up  and  it  only  reach( 
to  Mr.  Tweed's  waist;  and  under  it  was  this  emphatic  senten< 
"Can  the  law  reach  him;"  the  law  did  reach  him,  and  the 
will  reach  every  single  millionaire  in  the  State  of  New  York  if 
you  will  always  put  a  just,  square,  honest,  equal  tax  based  on 
system  of  justice  to  all. 

Q.  What  do  you  think  would  be  the  result  if  the  present  law 
faithfully  executed?  A.  I  think  if  the  present  law  was  faithfulb 
executed  with  the  amendment  proposed  by  Mr.  Deyo,  it  woi 
cease;  I  think  this,  if  our  town  assessors  were  made  amenabl 
to  some  higher  court,  for  instance,  to  the  State  assessor; 
have  noticed  how  beautifully  this  has  worked  in  our  board  oi 
health;  you  take  a  town  board  of  health;  a  cry  is  made  to  remove 
a  nuisance,  and  they  pay  no  attention  to  it;  that  man  goes  to. 
the  State  Board  of  Health,  and  they  send  down  and  say:  "Look 
here,  if  you  don't  move  that  we  will  call  you  up;"  now,  the  town 
assessor  is  in  a  very  unfortunate  condition;  everybody  is  on  to 
him  if  he  does  the  square  thing;  we  all  know  that;  well,  if  ho 
could  go  to  those  gentlemen  whom  he  is  assessing  ;mtl  say:  "I  have 
got  to  do  the  square  thing;  if  I  don't  the  State  board  is  after  me, 


413 

and  they  will  impeach  me;"  lie  can  get  out  of  the  difficulty  to  a 
certain  extent  I  think,  and  in  that  way,  I  think,  we  might  reach 
more  personal  property  than  we  do. 

Q.  Do  you  think,  under  the  law,  as  it  exists  to-day  that  a  town 
assessor  can  not  be  reached  for  non-performance  of  his  official 
duty?  A.  I  don't  know  but  he  can  be,  but  our  whole  system  of 
taxation  is  demoralized;  we  have  got  to  start  anew;  there  is 
no  rone  in  it;  we  have  got  to  start  anew;  every  man  seems  to  feel 
around  in  the  country  and  everywhere  else  that  it  is  an  honest 
thing  to  escape  taxation;  he  will  chuckle  over  it  and  have  a 
good  time;  I  think  we  ought  to  go  back  and  adopt  an  honest,  square 
system  of  listing. 

Q.  Don't  you  know  that  every  assessor  in  the  State  of  New 
Yoik  to-day,  whether  a  city  assessor  or  town  assessor,  is  required 
to  swear  when  he  has  completed  the  assessment-roll  that  all  the 
property,  real  and  personal,  is  therein  contained  and  assessed 
for  its  full  and  true  value?  A.  Yes,  sir;  and  for  that  very  reason 
I  would  not  be  an  assessor;  you  could  not  get  the  office  on  to  me; 
I  would  not  take  that  oath;  they  would  run  a  man  out  of  town 
if  he  took  it  and  carried  it  out  square;  we  are  so  demoralized;  we 
can  not  tone  this  up  without  starting  de  novo  —  starting  anew,  in 
my  judgment;  I  will  express  my  ideas  in  regard  to  certain  plans 
that  have  been  suggested;  take,  for  instance,  our  State  tax;  sup- 
pose you  make  corporations  pay  the  State  tax,  that  would  be  a 
great  relief;  there  is  somewhere  in  the  neighborhood  of  12,000,000 'r 
you  throw  that  on  to  corporations,  and  by  so  doing 
they  pay  more  than  they  do  now;  in  that  way  you  relieve 
12,000,000,  but  we  have  about  65,000,000;  now,  take  12,000,000 
out;  we  have  heard  a  great  deal  about  this  collateral 
inheriiance  law  as  being  a  wonderful  relief  to  the  farmers;  how 
much  do  we  get?  Not  quite  2,000,000;  but,  suppose  we  get 
2,000,000  collateral  inheritance;  say  that  the  corporations  pay 
the  12,000,000  State  tax;  we  will  put  2,000,000  on  to  the  inherit- 
ance; now,  we  have  got  14,000,000;  well,  in  that  12,000,000 

include  what  we  raise  now  by  the  organization  of  corporations, 
and  so  forth;  that  all  comes  under  that;  we  will  say  12,000,000 


4:14: 


is  thrown  on  to  the  corporations;  they  are  relieved  from  all  other 
taxation;  we  have  got  12,000,000  and  we  have  got  2,000,000 
out  of  our  inheritance  we  will  say;  now,  add  to  that 
some  have  suggested  an  income  tax,  to  the  amount  of  2,000,0( 
more  we  will  say,  and  by  and  by  that  income  tax  is  precisely  tl 
listing  bill;  what  else  is  it?  Assume  that  you  pass  that,  you  hai 
got  16,000,000,  and  you  raise  65,000,000;  that  leaves  yc 
49,000,000  to  raise  and  how  are  you  going  to  raise  it* 
We  are  relieved  a  little,  but  fairly  and  squarely;  we  want 
listing  bill  that  will  cover  the  whole  field;  that  has  been  my  id< 
in  regard  to  our  system;  but  I  feel  as  a  rule  that  the  farmer  is 
the  ditch;  there  is  not  a  farmer,  L  don't  care  how  successfi 
he  is,  that  is  much  more  than  paying  his  way,  and  he  makes 
hard  living  at  that;  now,  if  we  can  relieve  him  from  this  excess!1 
tax;  if  we  can  throw  it  on  to  the  personal  property  what  will 
the  result?  A  man  that  has  got  taxed  personal  property  wi 
say:  "Here,  if  I  have  got  to^pay  taxes  I  will  go  to  work  with  the 
personal  property;  I  will  buy  a  farm;  I  will  start  a  manufactory; 
I  will  build  houses;  I  will  go  to  work  with  the  money,  and  this 
vast  amount  will  go  to  work,  and  my  farm  and  every  man's  house 
will  be  worth  more  than  it  is  to-day,  and  we  have  restored  the 
normal  relations  between  the  different  classes  of  industry  which 
to  day  I  affirm  is  abnormal;  there  is  an  abnormal  condition  to-day 
between  real  estate  and  personal  property;  make  the  tax  equal 
and  everybody  has  got  to  go  to  work  and  the  result  is  our  holder 
of  vast  wealth  of  the  State  of  New  York  —  it  is  like  a  bee-hive  — 
and  every  man  has  to  work,  and  every  man's  farm  is  worth  some- 
thing and  every  man's  little  house  will  sell  for  something  more 
than  the  mortgage  on  it,  and  a  general  and  healthy  boom  will  be 
the  result  all  over  the  country  of  just  legislation. 

Q.  Is  it  not  a  fact  that  the  bulk  of  taxation  of  the  farmer  is 
local  in  its  nature?  A.  Well,  he  pays  his  share  now  of  the  State 
tax. 

Q.  But  if  you  consider  the  proportion  of  the  amount  that  he  pays 
that  goes  into  the  the  treasury  towards  the  support  of  the  State 
government  —  have  you  considered  the  proportion  of  the  tax  paid 


4:15 

by  the  farmer  which  goes  toward  the  support  of  the  general  State 
government?  A.  1  know  that  it  is  small,  but  it  is  in  proportion 
to  the  amount  that  he  pays  for  anything  else. 

Q.  I  am  not  saying  that  he  does  not  pay  his  fair  proportion? 
A.  I  am  aware  that  the  farmer  does  not  pay  all  this  65,000,000; 
I  am  fully  aware  of  that;  he  pays  only  a  small  share  of  it;  but 
that  don't  affect  the  robbery. 

Q.  My  question  is  not  intended  to  belittle  the  farmer  as  a  tax- 
payer, but  with  a  view  of  ascertaining  from  yon  whether  or  not 
the  burden  of  taxation,  such  as  it  is,  is  largely  of  local  character? 
A.  Ye*,  sir;  J  think  it  is  largely;  but  here  is  the  point;  I  live  in 
a  town  where  we  have  two  railroads,  the  Boston  and  the  Hudson 
river;  they  are  taxed  very  heavily;  now  you  throw  this  tax  on  to 
the  corjK>rations  to  pay  the  State  12,000,000,  and  you  take  them 
right  out  from  our  town;  they  pay  this  and  they  won't  pay  any 
more  in  proportion  than  they  do  to-day;  there  is  our  point  in 
regard  to  the  lisling  bill;  you  say  our  tax  is  local;  so  it  is;  but 
we  demand  that  every  railroad  shall  pay  a  local  tax  too. 

By  Mr.  Guenther, 

Q.  13oes  it  not  on  its  real  estate?  A.  A  trifle;  what  is  the  real 
estate  compared  to  the  value  of  the  road;  a  mere  bagatele. 

By  the  Chairman. 

Q.  Do  you  know  how  much  a  mile  either  of  those  two  railroads 
is  taxed  in  your  town?  A.  I  don't  know  exactly. 

Q.  My  experience  has  been  that  the  railroads  are  taxed  very 
heavily  on  the  real  estate?  A.  I  concede  all  that;  but  what 
becomes  of  the  stock  and  bonds;  the  real  estate  part  of  a  rail- 
road is  a  very  small  thing. 

Q.  The  stock  and  bonds  represent  the  capital  invested  in  the 
road?  A  We  claim  that  they  should  be  taxed;  and  all  we  get 
now  for  the  local  lax  is  the  tax  upon  this  real  estate,  which  is 
really  a  small  part  of  the  value,  but  it  helps  us. 

Q.  You  complained  a  moment  ago  about  what  you  understood 
to  be  double  taxation;  are  you  sure  that  what  you  suggest  now 


416 

would  not  be  double  taxation,  remembering  that  the  capital  is 
invested  in  the  real  estate  and  the  company's  rolling  stock? 
A.  Yes,  sir. 

Q.  You  are  in  favor  of  assessing  all  of  the  real  estate  and 
of  the  stock  and  bonds;  wouldn't  that  be  double  taxation? 
I  think  it  would  not;  in  this  way;  we  figure  that  a  mile  of 
road  is  worth  about  $30,000  or  thereabouts;  I  think  that  is 
fair;  we  figure  that  a  railroad  is  worth  about  $30,000  a  mile 
its  real  estate,  its  rolling  stock  might  be  included  in  that  but 
don't  think  it  is;  I  think  that  is  what  they  figure  the  real 
of  the  railroad;  now  you  know  that  is  nothing  compared  to  the 
stock  that  represents. 

Q.  Does  not  this  stock  already  contribute  its  proportionate 
share  in  meeting  the  State  expense?  A.  I  think  not. 

Q.  None  whatever?  A.  Corporations  pay  a  little  here  in  this 
corporation  tax;  about  $1,600,000,  I  think;  we  raise  in  that  way 
and  the  railroad  gets  in  there;  I  don't  think  any  of  those  cor- 
porations pay  half  a  mill. 

Q.  Do  you  complain  that  they  are  not  taxed  sufficiently  high 
on  their  real  estate?  A.  I  think  that  $30,000  on  the  real  estate ( 
is  perhaps  a  fair  assessed  value  of  the  real  estate,  only  that 
does  not  represent  the  real  value  of  the  road;  you  see  outside 
of  that  no  stock. 

Q.  How  do  you  think  the  Legislature  could  provide  for  the 
fixing  of  the  true  rate  on  real  estate  of  railroads  by  an  assessor? 
A  The  same  as  you  could  on  a  farm. 

Q.  Does  not  the  same  rule  apply  now?  A.  It  does  to  a  certain 
extent. 

Q.  Is  not  the  present  law,  so  far  as  the  real  estate  of  a  rail- 
road is  concerned,  ample?  A.  E  think  that  the  assessed  value 
of  $30,000  is  a  fair  statement  for  that  part  of  the  road. 

Q.  The  law  does  not  fix  that;  I  am.  talking  about  the  statute; 
is  not.  the  statute  broad  enough  now  to  insure  by  its  faithful 
execution  the  full  value  of  railroad  real  estate?  A.  As  I  said 
before,  we  don't,  reach  it. 


417 

Q.  If  it  is  not  assessed  properly  is  it  not  the  fault  of  the  local 
assessor?  A.  Yes,  sir;  you  understand  this  road  is  a  very  strong 
corporation,  and  there  is  a  very  strong  pressure  brought  to  bear 
on  the  assessor,  and  the  whole  system  of  taxation  is  demoralized; 
jit  is  demoralized  as  much  on  a  railroad  as  anywhere  else. 

Q.  If  they  influence  every  assessor  of  the  State  why  is  it  not 
.  i  fair  presumption  that  they  iii ftu once  everbody  liert,  and  how 
lire  you  going  to  get  relief?  A.  It  is  strange  that  a  man  can  not 
bet  help  because  every  body  does  wrong;  I  think  that  if  that 
K30,000  was  fixed  as  it  is  and  that  the  bonds  and  the  stocks 
Imtside  of  that  were  taxed  proportionately  and  fairly,  it  would  be 
Ibout  the  fair  thing,  but  that  is  not  taxed. 

Q.  What  is  the  railroad  tax  per  mile  in  the  town  in  which  you 
Ive?    A.  It  is  estimated  f 30,000  a  mile;  I  have  not  got  the 
ires. 

Q.  You  do  not  know  what  the  assessment  is?    A.  No,  sir. 
Q.  Can  you  suggest  any  legislation  whereby  you  can  Compel 
assessor  to  assess  the  real  estate  of  a  railroad  higher  than 
rhat  it  is  now?    A.  I  know  of  no  other  except  by  making  him 
tenable  to  the  State  assessor  as  a  higher  court. 
Q.  Wouldn't  the  large  corporations  be  as  apt  to  reach  the  State 
sessor  as  they  would  the  local  assessor?    A.  Well,  there  is  the 
it;  I  don't  think  they  are  us  demoralized  as  we  fellows  in  the 

Q.  Bearing  in  mind  the  fact  that  the  State  assessor  does  not 
ive  to  go  before  the  people,  and  the  local  assessor  is  amenable 
the  taxpayers  of  the  town  in  \vhich  he  lives,  now  is  not  lie  more 
to  do  what  the  people  desire  than  a  man  who  gfHs  his  power 
17  appointment?    A.  I  think  not ;  1  think  I  illustrated  that  by  the 
ite  Board  of  Health;  they  ara  a  body  away  up  here  above  the 
and  they  can  say  to  a  little  town  board,  do  your  duty;  so  this 
t  State  Board  of  Assessors  can  say  to  those  little  fellows 
ind  in  the  towns,  do  your  duty,  or  we  will  take  your  head  off; 
in  that  way  we  may  succeed  to  a  certain  extent;  1  uoir't  lool£, 
rever,  for  anything  but  a  slight  improTement  in  the  system 
38  we  adopt  an  honest,  square  system  of  listing. 
53 


418 

Q.  Copied  after  the  Ohio  statutes?  A.  Something  like  that] 
Vermont  has  this  bill;  I  met  a  gentleman  from  there  tli€ 
other  day,  and  he  told  me  it  v/as  astonishing  what  a  change  the 
system  of  listing  has  shown;  in  Ohio  there  may  be  more  ililft 
culties  into  the  bill;  I  don't  think  it  is  necessary  to  follow  tht 
Ohio  or  Massachusetts  bill  exactly,  but  have  a  bill  of  our  own: 
they  are  all  around;  there  are  some  fourteen  States  that  hav« 
already  adopted  a  listing  bill,  and  [  think  a  time  will  come  wher 
every  State  in  the  Union  will  have  it,  and  then  I  would  like  to 
know  where  the  millionaires  will  go  with  their  saddle  bags. 

Q.  You  are  not  going  to  get  any  benefit  from  this  system  of  local 
taxation;  if  taxation  is  a  burden  to  the  farmer  at  all,  the  gre&i 
bulk  of  it  is  on  account  of  expenses  of  local  government ?    Aj 
Yes,  sir;  but  we  hold  this,  that  a  listing  bill  will  create  a  gene? 
tax  which  will  cover  the  taxes  of  every  county  to  a  great  extent. 

Q.  Take  Kensselaer  county,  within  which  you  reside;  any  bene 
derived  by  reason  of  the  operation  of  this  system  in  anotlj 
county  won't  do  you  any  good  as  far  as  local  taxation  is  cc 
cerned?  A.  Take  our  merchants,  and  all  that  class  of  infere* 
located  in  our  towns;  they  will  bear  a  higher  rate  and  in  that 
we  will  be  relieved,  and  that  i-ouies  by  listing. 

Q.  Won't  the  farmer  be  assessed  upon  his  horses  and  his 
and  oxen  and  upon  his  farming  implements?  A.  If  you  gentleni 
don't  make  any  limit;  I  suggest  $2,000  exemption,  which  cove 
the  poor  man,  no  matter  who  he  is. 

Q.  You  are  in  favor  of  taxing  deposits  in  savings  banks? 
Yes,  sir;  I  think  a  man  that  has  money  in  a  savings  bank  \V 
has  an  exemption  outside  of  that  the  same  as  everybody  else 
could  with  the  same  propriety  pay  it  as  if  he  had  a  little  home. 

Q.  Would  not  that  reach  the  poorer  classes?      A.   Wouldi 
it  cause  that  man  to  run  out  and  buy  a  little  lot  and  build 
little  home?     That  is  what  we  want;  I  think  there  is  a  gre 
deal  of  money  to-day  in  our  savings  banks  simply  because  it 
not  taxed;  I  think  if  it  were  taxed  it  would  get  out  of  there. 

Q.  What  would  you  make  the  limit  in  the  savings  bank?    A 
think,  perhaps  |500,  something  like  that;  I  think  any  man  th 


•±19 

has  got  money  about  that  can  afford  to  pay.,  a  tax;  the  great 
itroubie  with  our  listing  bill  heretofore  has  been  we  have  brought 
| it  in  and  it  has  been  crude;  some  men  wanted  to  load  it  up  with 
taxes  on  churches;  other  men  wanted  to  tax  everything,  horses, 
[dogs  and  cats,  simply  to  make  it  ridiculous,  and  the  bill  every 
is  hurt  in  that  way;  give  us  an  exemption  fairly  and  squarely 

I  covering  the  necessities  of  life,  and  a  man  to-day  who  has  $100,000 
[hid  in  New  York  in  diamonds,  let  fiim  pay  it. 

Q.  Don't  you  think  it  would  be  well  to  fix  a  limit  on  the  exemp- 
Ition  of  churches?  A.  Yes,  sir;  I 'don't  believe  in  taxing  churches; 
my  idea  would  be  to  make  out  a  bill  that  is  not  objectionable 
any  more  than  it  is  possible;  reach  the  class  of  property  that  is  in 
the  liiindb  of  men  who  are  able  to  pay,  and  not  come  right  down 
Jin  a  picayune  way  and  make  the  bill  ridiculous ;  give  us  an  honest, 
inare  bill,  statesman-like,  and  I  believe  it  would  pass  and  be 
umored  in  the  State,  and  put  our  State  in  a  condition  of  prosperity 
[paralleled,  by  giving  every  man  opportunities  which  to-day  are 
mly  in  the  hands  of  the  few. 

JJy  Mr.  Hamilton. 

Q.  What  are  your  views  in  regard  to  the  present  rate  of  interest? 

II  have  thought  of  that  a  good  deal  and  I  have  not  pressed  in  my 
[own  mind  the  idea  of  charging  the  rate;  I  think  that  six  per  cent 

a  rate  which  anybody  that  has  poor  security  perhaps  could 
ford  to  pay,  and  anybody  to-day  that  has  gilt-edged  security 
in  get  it  for  four  or  five;  I  have  never  been  much  of  an  enthusiast 
>r  lessening  the  rate. 

Q.  Do  you  believe  that  your  sentiments  are  the  prevailing 
(sentiments  among  the  farming  community?  A.  I  think  they  are; 
,1  think  I  voice  the  sentiments  of  100,000  farmers  in  the  State 
'to-day. 

Q.  What  are  your  views  in  relation  to  the  collateral  inheritance 
tax?  A.  I  think  it  is  a  good  one,  but  I  don't  want  it  to  take  the 
jplac-e  of  the  listing  bill;  I  think  Mr.  Campbell's  idea  is  a  good  one, 
sa  grading  system;  I  am  very,  much  in  favor  of  it;  I  am  in  favor 
,of  a  bill  like  that  and  also  an  income  tax  bill;  I  am  in  favor  of  that; 


420 

men  with  great  fortunes  can  afford  to  pay  something;  at  the 
same  time  we  want  to  strike  taxation  honestly  and  squarely;  we 
have  got  to  tax  every  class  of  property  honestly  and  squarely. 

3>y  the  Chairman. 

Q.  You  say  that  people  who  have  great  fortunes  ought  to  pay 
an  income  tax;  where  will  you  draw  a  line,  because  if  you  are 
going  to  confine  it  to  people  with  great  fortunes  you  would  not 
get  so  much  ?  A.  I  would  grade  it ;  a  man  with  $10,000  income  or 
5,000,  I  would  not  object,  tax  him;  and  if  a  man  gets  a  million 
a  year  let  it  be  graded  to  meet  it;  I  would  not  object  to  that;  my 
idea  is  this,  gentlemen,  let  our  corporations  pay  our  State  tax  and 
our  income  tax  and  our  collateral  inheritance  tax,  and  our  little 
tax  that  we  throw  on  corporations  —  don't  let  that  be  considered 
sufficient  to  relieve  the  great  taxation  question  with  the  farmer 
of  the  State;  go  farther  than  that;  that  is  my  idea. 

Q.  Does  you  information  also  call  for  the  abolition  of  what  is 
now  known  as  an  allowance  for  indebtedness  as  against  assess- 
ments on  personal  estate?  A.  I  am  in  favor  of  abolishing  that 
distinction;  that  would  be  a  great  point;  yet  you  observe  there  isi 
an  objection  to  it;  unless  you  establish  a  listing  bill  you  simply 
array  the  mortgagee  against  the  mortgagor  and  he  says  to  the 
mortgagor,  "  Here,  if  I  have  got  to  pay  this  tax,  you  agree  to  pay 
it,  and  then  you  can  have  the  money;"  but  if  we  have  a  listing 
bill  you  remove  the  mortgagor  from  being  under  the  tyranny  of 
the  mortgagee,  and  you  don't  any  other  way;  now,  I  want  to  say 
one  moi'o  word,  and  that  is  this;  a  year  ago  the  Democratic 
party  passed  in  its  platform  this  resolution:  "We  believe  in 
equal  and  just  taxation;  we  believe  that  corporate  stocks  and 
bonds  should  bear  their  share  of  the  public  burden; "  that  is  about 
the  idea;  r.ow  the  farmers  of  the  State  of  New  York  took  that; 
they  believed  it;  they  believed  the  great  Democratic  party  was 
sincere,  ;nid  \*e  rolled  up  what;  an  unprecedented  majority  for 
our  Governor;  it  was  the  farmers  of  the  State  of  New  York  thafc 
gave  ^lr.  3-lowc-r  that,  on  the  belief  that  they  were  going  to  have 
an  honest  tax  law,  and  last  year  we  came  forward;  the  I^egisla- 


421 

Ifcure  did  not  give  us  this  bill,  but  what  did  they  do;  thetv 
•appointed  tlus  honorable  commission,  and  we  have  looked  to  this 
Isommission  with  a  great  deal  of  interest. 

By  Mr.  Ahearn. 

1  Q.  Tb.'i*j  vas  Governor  Flower's  suggestion?  A.  Yes,  sir;  wo 
lave  looked  to  you  with  a  great  deal  of  interest;  the  farmers  of 
•his  State  hate  all  looked  to  this  commission  and  expected  a 

•>road,  Hi.uest,  statesman-like  tax  bill. 

By  tlio  Chairman. 

I  Q.  What  do  you  think  of  the  idea  of  relieving  real  estate 
jbsolutoly  from  taxation  for  the  purposes  of  the  general  State* 
)vernment,   and  thereby   doing  away  with  this  much  mooted 
|uesti<m  of  equalization  between  the  counties?    A.  As  I  said, 
ly  change  that  will  relieve  the  farmer  from  excessive  tax  is  a 
ilief ;  *t  is  a  relief  to  a  certain  extent;  the  question  is,  how  much 
11  it  lie? 

Q.    lion':;  you  think   that  much  of  the  trouble   ancl   disquiet 
it  has  arisen  is  on  account  of  this  so-called  equalization,  whidi 
fanners  allege  is  not  equalization  at  all?    A.  I  think  there 
is  been  a  great  deal  of  disquiet  in  regard  to  that;  if  we  should 
a  lisr«n£  bill  assessing  everything  at  its  supposed  real  value 
wouldn't  that  obviate  all  that  anxiety  and  dickering? 
Q.   Suppose   that  the  Legislature   should  pass  a  law   which 
mid  relieve  real  estate  of  taxation  for  general  State  purposes, 
shou'id  also  pass  a  law  leaving  it  to  the  local  authorities  tu 
property  jn  their  own  way?    A.  We  are  absolutely  opposed 
that. 

|Q.    Vou  do  not  1hink   that  the  people  of  Jftensselaer  county 
fold  bo   trusted  to  levy  taxes  for  the  purposes  of  their  own 
^eminent?    A.  That  is  the  local  option  bill;  that  is  simply  the 
^  \\ecl jre  of  this  cursed  single  tax  idea;  it  is  the  entering 
edge  to  it,  and  when  you  get  our  local  officers  in  our  different 
rns   and    counties   with  the  privilege   of   manipulating   that 
i,  will  more  01  less  be  developed;  I  am  very  happy  to  say 


422 

that  in  Mar  viand  I  have  noticed  last  week  that  the  towns  that 
have  it  there  have  objected  to  it. 

Q.  I  don't  think  any  man  has  an  idea  of  passing  such  a  law  us 
would  leave'  the  question  of  single  tax  open,  but  providing  for  the 
taxation  of  real  estate  and  personal  property  as  in  the  election 
of  local  authorities  they  deem  best;  for  instance,  one  county 
might  be  in  favor  of  taxing  all  personal  property  within  reovli; 
another  county  might  not  be  in  favor  of  assessing  personal  prop- 
erty at  all;  don't  you  think  that  the  people  might  be  intrusted  to 
use  their  own  judgment  in  that  regard  for  local  purposes?  A. 
That  is  a  question  that  I  have  thought  a  good  deal  about;  on  the 
local  option  bill  that  was  brought  up  last  winter  I  have  no 
changed  my  opinion  as  to  the  undesirability  of  its  practical 
results;  I  think  that  our  great  tax  question  should  be  broad 
the  State  should  have  its  voice  in  it;  it  should  be  uniform  an( 
wide-spread  and  no  dickering,  and  the  moment  you  divide  it  11 
that  way  it  becomes  a  system  of  rings  and  all  sorts  of  chicaneiy 
and  the  poor  every  time  will  suffer. 

Q.  You  think  that  the  men  congregated  here  in  the  capital 
be  trusted  better  on  the  question  of  taxation  than  the  local  legis 
lative  bodies  of  the  counties?    A.  Yes,  sir;     I  do. 

Q.  It  has  been  recommended  or  rather  suggested  by,  at  leasd 
one  of  the  State  assessors,  and  by  a  number  of  business  men  wh< 
have  appeared  before  the  committee  that  the  taxation  of  persona 

property  has  a  tendency  to  drive  capital     away  from  the  State 

« 

what  is  your  opinion  as  regards  that?  A.  I  am  glad  you  brough. 
that  up ;  I  have  made  that  a  study,  a  little  in  connection  with  thi 
other;  that  is  a  vital  point;  I  think  that  is  not  well  taken; 
don't  think  that  the  practical  result  will  be  so;  for  instance,  as 
said,  we  have  fourteen  States  that  have  already  passed  this  listing 
bill;  the  time  is  coming  when  every  State  of  the  union,  unless  tfa. 
great  State  of  New  York,  and  we  would  if  it  was  not  for  our  vae 
capital,  will  have  a  listing  bill;  if  every  other  State  has  it  wher 
are  those  fellows  going  to  take  their  money?  If  they  go  int< 
Vermont  there  is  a  listing  bill;  into  Ohio  there  is  a  listing  bill 
Massachusetts,  there  is  a  listing  bill,  and  before  long  there  will 


423 

in  New  Jersey;  if  they  do  go  are  they  injured  b~y  it?  A.  I  would 
rather  have  a  good,  faithful,  honest  mechanic  with  a  little  home 
paying  an  honest  tax  than  a  millionaire  with  his  money  in  his 
saddlebags  running  over  the  country  to  escape  taxation. 

Lorenzo  I).'  Collins,  called  as  a  witfaess,  being  duly  sworn, 
testified  as  follows: 

By  Mr.  Hamilton. 

Q.  You  aie  a  resident  of  the  town  of  Watervliet?     A.  Yes,  sir. 

Q.  You  have  represented  Albany  county  in  the  State  Senate? 
A.  Yes,  sir. 

Q.  You  have  given  attention  to  the  question  of  taxation?1 
A.  Yes,  sir;  I  have. 

Q.  You  are  a  member  of  the  league?  A.  I  am  president  of  the 
State  Farm«jr&*  League. 

Q.  Also  a  member  of  the  Alliance?    A.  I  am  not. 

Q.  How  long  have  you  been  connected  with  the  league?  A. 
Three  years. 

Q.  During  that  time  how  long  have  you  acted  as  president? 
A.  This  is  my  second  term. 

Q.  What  is  your  ocupation?    A.  I  am  a  farmer. 

Q.  How  long  have  you  engaged  in  that?    A.  Since  1860. 

Q.  In  the  county  of  Albany?    A.  Yes,  sir. 

Q.  What  have  yen  to  say  as  to  the  propriety  of  modifying  the 
present  laws  relating  to  taxation,  assessment  and  interest  so  far  as 
they  affect  the  agricultural  or  other  interests  of  the 
State?  A.  It  is  very  evident  that  the  farmers  suffer  from  over- 
taxation; it  has  been  growing  while  personal  property  has 
been  escaping  taxation;  I  don't  deny  but  what  it  is  a  very  knotty 
question  to  get  at  it  fairly  and  honestly;  there  has  been,  I  think, 
about  sixty  years  since  there  has  been  any  modification  of  the  tax 
laws;  as  Mr.  Spalding  said,  farm  taxes  have  increased  five  or  sii: 
times  since  the  war;  they  have  learned  how  to  dodge  the  taxation 
on  personal  property;  they  are  paying  70,000,000  less  on  personal 
property  than  twenty  years  ago;  and  we  all  know  the  increase 
is  enormous;  we  come  here  not  as  cranks,  but  incn  Unit  want 


424 

simple  justice;  I  have  a  very  high  opinion  of  the  State  Legislatui 
of  New  York;  the  farmers  have  not  looked  after  their  rights  as 
other  classes  do;  I  have  been  in  both  houses;  a  man  comes  ami! 
wants  a  bill  passed  he  urges  you;  you  say,  what  is  your  tax?  You 
meet  about  it  as  you  gentlemen  here,  and  nobody  comes  to  oppose 
it;  I  would  very  much  rather  address  you  than  a  local  board  at 
home;  in  my  opinion  the  Legislature  intends  to  do  right;  it 
simply  the  farmers  who  have  neglected  their  own  interest; 
tax  is  almost  unbearable;  my  tax  on  my  farm  —  I  wTas  figurii 
it  to-day  —  is  $247,  the  school,  State,  town  and  county  tax  and  road 
tax;  now,  I  know  with  equal  taxation  it  should  not  be  to  exceed' 
seventy-five  dollar^;  well,  I  am  all  the  time  supposing  that  we  raise 
that  |200  and  give  it  to  the  millionaire;  we  pay  the  taxes,  and 
the  thing  has  been  going  from  bad  to  worse  and  we  have  got  tdrj 
have  help;  it  has  depreciated  our  property,  and  as  Mr.  Spaldini;" 
says,  the  farming  interest  of  this  State  has  got  into  the  bottom 
of  the  ditch ;  I  presume  there  are  gentlemen  here  whose  parentage 
are  farmers,  some  of  them;  I  don't  know  but  you  all  were,  because 
the  farming  class,  the  young  men,  go  to  the  cities  now;  there  is. 
nothing  for  them  to  do  to-day  in  the  country  but  toil- 
ing to  make  a  living;  for  instance,  here  is  a  farmer 
who  has  got  two  sons;  he  gives  one  $10,000  and  buys 
the  other  a  farm  for  $10,000;  the  one  that  has  got 
the  $10,000  goes  into  business  and  don't  pay  a  mill;  is  that 
justice?  If  you  give  us  justice  I  will  assure  you  that  the  agricul- 
tural interests  in  this  State  will  come  up;  it  will  come  up;  it  is 
being  depreciated  lower  and  lower;  you  go  to  a  man  and  talk 
about  buying  a  farm,  the  first  question  is,  what  are  your  taxes? 
How  came  our  taxes  to  jump  up  from  fifteen  dollars  to  $147?  The 
land  is  certainly  worth  no  more;  it  isn't  worth  as  much;  it  is 
this  old  way  of  taxing  what  is  in  sight. 

Q.  Eight  in  that  connection,  don't  you  think  that  the  development  j 
<of  the  State  itself  has  had  something  to  do  with  increasing  the  j 
cost  of  government?  A.  I  do. 

Q.  For  instance,  around  your  locality,  there  has  been  a  large  I 
development?  A.  Yes,  sir. 

Q.  Of  course,  you  can  not  have  development  without  increased 
cost?     A.  Certainly. 


425 

Q.  What  is  true  as  to  your  locality,  is  it  not  true  as  to  the  bulk 
of  the  State?  A.  Undoubtedly,  it  is,  but  not  to  any  such  extent 
as  we  are  taxed. 

Q.  Don't  you  think  that  another  thing  that  has  much  to  do 
with  the  present  depressed  condition  of  the  farmer  is  the  opening 
up  of  the  great  west  and  the  means  of  transit?  A.  Yes,  sir;  I 
shall  make  a  remark  that  will  astonish  you;  I  was  chairman  of 
canals  when  they  paid  six  million  and  a  half  to  the  State,  and  we 
had  then  908  miles  of  canals;  I  was  chairman  in  the  House  away 
back  in  1859  and  1860;  people  look  at  me  as  solid  canal  man;  I 
am  not  a  fogy;  I  know  the  canals  have  outlived  their  day;  it  is 
nonsense  to  say  they  have  not;  when  you  are  talking  of  their 
leveling  down  the  freight  of  railroads;  in  1883  they  carried 
6,600,000'  tons  of  freight  and  the  Central  railroad  carried  10,000,000 
tons;  they  are  running  scot  free  and  we  are  taxed  to  bring  the 
|  western  products  to  tide-water  and  to-day  the  canals  are  carrying 
,4.200,000  tons,  and  the  railroads  20,800,000  tons;  we  are  asked 
to  save  a  canal  that  has  outlived  its  day,  and  paying  this  tax  we 
I  ought  not  to  pay,  and  discriminating  against  ourselves. 

Q.  Do  you  think  it  would  be  for  the  benefit  of  the  whole  State  if 
Ithe  canals  were  closed  up  altogether?  A.  I  think  it  would  be  a 
(benefit  to  the  State  of  New  York  if  the  canals  to-day  were  sold; 

am  talking  for  myself  now,  not  for  the  league;  I  guarantee 

tat  nine- tenths  of  the  league  are  with  me  on  this  issue;  what  is 

ie  use  of  holding  on  to  an  elephant  with  the  head  off. 

Q.  You  think  they  have  had  their  day  and  that  has  gone  by?  A. 
Sfes,  sir;  the  minute  that  the  railroads  introduced  the  lock  joints 

id  steel  rails  that  moment  the  canals  were  gone. 

By  Mr.  Hamilton. 

Q.  What  are  your  views  in  regard  to  allowing  a  deduction  for 
idebtedness  as  an  offset  to  assessments  upon  personal  property? 
I  would  be  still  more  liberal  than  Mr.  Spalding  is ;  I  would  make 
it  deduction  on  a  listing  bill  $3,000. 

Q.  The  present  law  allows  an  offset  for  indebtedness  against 
amount  that  may  be  assessed  against  you  for  personal  prop- 


426 


erty,  a  distinction  not  allowed  in  the  case  of  real  estate;  would 
you  maintain  that  distinction  or  place  them  both  upon  the  sam 
level?    A.  Place  them  both  upon  the  same  level. 

Q.  Carry  it  through  in  both  or  deny  it  or  both?    A.  I  woi 
carry  it  through  on  both. 

l>y  the  Chairman. 

Q.  In  other  words  a  man  ought  to  be  taxed  for  all  he  holds  ai 
owns?    A.  For  what  he  holds. 

By  Mr.  Hamilton. 

Q.  What  have  you  to  say  as  to  the  present  rate  of  interest' 
A.  I  never  was  much  of  a  croaker  on  interest;  I  never  said  mu 
about  the  interest  at  all;  I  sometimes  have  said  that  money  wj 
like  any  other  merchandise. 

Q.  Regulated  by  supply  and  demand?  A.  Supply  and  demand; 
there  is  one  thing  I  would  like  and  I  look  to  this  Legislature 
get  up  a  bill;  I  know  it  is  a  knotty  question;  I  know  it  is  a  qucs •( 
tion  a  great  deal  easier  to  talk  about  then  to  sit  down  and  draw  it 
to  meet  all  classes,  because  you  will  meet  some  of  thosey 
"I  told  you  so;"  you  have  brains  enough  here;  you  have  got 
the  power  to  give  us  a  bill  very  near  right,  and  I  expect  you  to  d<X 
it;  I  would  say  as  to  mortgages  in  either  cities  or  counties,  have, 
the  mortgages  pay  the  interest  and  he  deduct  it  from  his  real 
estate. 

Q.  Pay  the  tax  you  mean?  A.  Pay  the  tax;  I  should  deduct 
it;  I  would  not  have  him  pay  taxes  twice. 

Q.  Wouldn't  that  lead  to  the  foreclosure  of  many  mortgages? 
A.  No,  sir;  I  have  got  a  mortgage  on  my  farm;  I  pay  five  per  cent; 
if  I  have  a  tax  on  this  it  will  be  understood;  talking  about  money 
being  driven  out  of  the  country  by  taxes,  that  is  just  what  we 
want;  we  wont  have  to  protect  it  then;  we  do  have  to  protect  it 
now  by  our  hard  earnings;  there  is  no  danger  of  anybody  conceal- 
ing his  farm,  but  if  he  has  |20,000  he  is  apt  to  conceal  it,  and  then 
we  have  got  to  protect  it;  the  farming  costs  less  to  protect  than 
any  interest  in  the  country  and  yet  it  pays  the  most  taxes. 


427 

By  the  Chairman. 

Q.  What  do  you  think  of  the  idea  of  divorcing  State  and  local 
taxes?  A.  Separating  them? 

Q.  Yes,  'sir;  by  relieving  real  estate  altogether  from  taxation 
for  the  expenses  of  the  general  State  government?  A.  As  far 
as  it  goes  it  is  well;  now  take  some  counties  it  would  work  admir- 
ably; take  a  county  like  this,  with  the  great  city  of  Albany;  we 
are  taxed  6,000,000  on  personal  property;  don't  any  of  us  know 
there  is  more  than  6,000,000  of  personal  property  in  this  city; 
don't  anybody  know  there  is  over  70,000,000  of  personal  property 
in  this  city;  it  escapes  taxation;  it  is  put  on  to  the  farm  and  the 
man  that  owns  a  little  house;  he  is  the  one  that  pays  it;  it  is 
the  poor  ones  to-day  that  are  paying  the  taxes;  I  will  tell  you  one 
thing,  you  have  got  to  relieve  us;  if  you  don't,  and  you  come  from 
your  grave  a  hundred  years  from  now  you  will  find  the  farmers 
on  this  earth  are  nothing  else  than  serfs;  let  the  same  proportion 
go  on  for  a  hundred  years  and  everything  will  be  owned  by 
millionaires  the  same  as  in  Europe;  it  is  a  strange  thing;  the 
farmers  don't  know  and  realize ;  they  don't  know  they  have  got  to 
appear  and  meet  this  issue;  we  don't  ask  anything  but  justice. 

Q.  Do  you  mean  that  they  do  not  exercise  the  right  of  suffrage 
as  they  should;  I  am  interested  in  knowing  what  you  mean  by 
saying  that  the  fanners  do  not  exercise  the  privileges  they  enjoy? 
A.  The  farmers  are  glad  to  see  us  fellows  when  we  are  around 
after  the  nomination;  we  go  to  them  and  dandle  the  baby  on  our 
knees  and  talk  to  the  old  lady  and  we  get  their  votes;  instead  of 
coming  right  here  and  following  us  here  and  demanding  justice, 
they  stay  home,  drink  their  cider,  and  when  you  go  to  talk  with 
them  they  think  there  is  a  "nigger  in  the  fence;"  I  think  that 
the  farmer  is  the  most  ignorant  cuss  in  the  world;  it  makes  ine  so 
mad;  lie  is  like  a  great  big  horse  letting  a  boy  whip  him  when  lie 
could  guzzle  the  boy  and  kill  him  in  a  minute;  it  is  like  sinners 
trying  to  get  into  heaven  through  a  dozen  doors  when  there  is  not 
but  one;  the  only  way  is  to  come  here  and  convince  you  people 
we  are  right. 


428 

Q.  What  is  the  idea  of  so  many  farmers'  associations? 
"Because  they  are  a  lot  of  fools;  that  is  all. 

Q.  Theren't  any  fools  in  the  State  League?    A.  I  hope  not. 

Q.  That  may  apply  to  the  Alliance,   I  suppose?    A.  I  don't 
say  {hat ;  I  am  not  censuring  that  organization. 

Peter  I>.  Johnson,  called  as  a  witness,  being  duly  sworn,  tesl 
fled   as   follows: 

By  Mr.  Hamilton. 

Q.  You  reside  in  Albany  county?    A.  Yes.  sir. 

Q.  You  are  a  farmer?    A.  Yes,  sir. 

Q.  How   long  have  you  been   so   engaged?     A.  All  my  life; 
ever  .since  I  was  big  enough  to  work. 

Q.  Have  you  given  attention  to  the  question  of  taxation? 
I  have  paid  some  attention  to  it. 

Q.  As  it  affects  the  agricultural  interest  of  the  State?    A.  Yet 
sir. 

Q.  What  have  you  to  say  as  to  the  propriety  of  modifying  tl 
present   laws  relating  to  taxation,   assessment  and  interest 
far  as  they  affect  those  interests?    A.  I  believe  that  the  lai 
should  be  changed  so  that  all  kinds  of  property  should  bear  51 
equal  burden. 

Q.  In  what  respect  do  you  suggest  those  amendments  a: 
necessary?  A.  Well,  I  don't  know  hardly  how  to  suggest  any 
because  this  law  in  itself,  as  it  is  to-day,  ought  to  act  properly; 
the  law  stands  that  all  men  are  taxed  alike,  but  there  seems  t< 
be  a  way  that  people  get  rid  of  paying  a  tax  on  property  thi 
they  own. 

-Q.  And  your  criticism  is  that  it  is  owing  to  evasions  of  thi 
law  and  not  to  defects  in  the  law?  A.  That  is  it,  because, 
I  understand  the  law,  it  says  that  all  property,  but  people  hav( 
become  accustomed  to  get  rid  of  the  law  either  by  perjury 
some  other  form,  hiding  their  property,  etc. 

Q.  It  is  generally  brought  up  that  the  farmers  object  to  th< 
escape   of  taxation  by  bonds   and  mortgages;  what  are  youi 


429 

views?  A.  T  claim  that  all  property  should  be  taxed  alike;  if 
there  is  a  double  tax  paid  on  bonds  and  mortgages,  there  ought 
to  be  a  double  tax  paid  on  indebtedness,  as  far  as  personal  prop- 
erty is  concerned,  but  it  looks  to  me  that  there  should  be  but 
a  single  tax  on  any  kind  of  property;  wherever  there  is  an  indebt- 
edness on  n  mortgage,  a  party  ought  not  to  pay  for  that  which 
they  don't  have. 

Q.  What  do  you  say  to  the  present  rate  of  interest?  A.  I 
don't  think  ii  would  be  consistent  or  to  the  best  interest  of  the 
country  to  change  the  rate  of  interest. 

Q.  What  do  you  think  as  to  the  taxing  of  savings  banks  depos- 
its? A.  I  believe  that  all  money  above  a  certain  amount,  which 
would  benefit  the  poor,  should  be  taxed  in  banks  as  well  as  in 
other  places,  for  the  reason  that  the  rich  take  the  benefit  of  the 
[banking  system  as  well  as  the  poor;  I  know  a  case  where  the 
man  put  $0,000  in  a  bank  and  he  was  not  taxed  one  dollar;  another 
poor  person,  under  the  law,  worth  $400,  with  $200  mortgage  on, 
[was  taxed,  and  the  other  man  not  taxed  a  cent. 

Q.  What  is  the  prevailing  sentiment  in  your  community  in 
[regard  to  the  inheritance  tax?  A.  I  think,  as  a  general  thing, 

is  indorsed,  but  I  must  admit  that  I  do  not  indorse  it;  I  say 

tat  there  is  an  injustice;  I  say  that  a  man  can,  in  his  life-time, 
dace  his  property  so  that  the  inheritance  tax  don't  touch  it;  he 

tay  assign  it:  he  may  sell  it;  he  may  get  rid  of  it;  and  then,  on 

ie  ether  hand,  you  might  be  worth  $1,000,000  at  your  decease 
ind  pay  your  tax  regularly  all  your  life  to  the  amount  of  a  great 

iany  thousand  dollars,  for  fifty  years,  and  the  other  one  never 

lid  a  cent  of  tax,  then,  according  to  this  inheritance  tax,  your 

lildren  are  taxed  just  as  well  as  the  other;  it  looks  to  me 

iere  is  an  injustice  there. 

Q.  What  are  your  views  on  what  is  known  as  the  graded 
leritance  tax  increase,  according  to  the  extent  of  the  inheritance, 

ie  greater  the  amount  of  the  inheritance  the  greater  the  rate? 
That  would  bear  equally  upon  all  alike;  there  would  be  no 
ice  of  getting  out;  for  instance,  a  man  could  not  sell  his 
>perty  during  his  life-time;  or  assign  it,  and  get  rid  of  paying 


430 

a  tax;  it  \vould  be  an  equal  burden,  as  I  understand  it;  thai 
would  indorse. 

Q.  The  comptroller  recommends  that  the  inheritance  tax 
amended  by  providing  that  the  rate  fixed,  say  at  five  per  cent  f< 
a  certain  amoiint,  shall  be  increased  six  per  cent  for  a  large  amount, 
seven  per  cent  for  a  still  larger,  and,  in  that  way,  carrying  it 
to  the  highest  amounts,  so  that  those  who  leave  the  largest  es1 
will  pay  a  higher  rate  than  those  who  leave  smaller  estates?  A. 
don't  see  why;  if  you  accumulate  $10,000  and  I  only  five, 
you  should  pay  any  more  in  proportion  than  the  increase  of  tin 
sum;  say,  if  I  had  f  5.000  and  you  had  f  10,000,  why  should  you  pat- 
ten per  cent  and  I  only  five. 

Q.  To  make  the  illustration  more  striking,  in  one  case  f  10,< 
and  the  other  case  |500,000,  that  there  should  be  a  different  rate' 
A.  I  don't  think  that  is  fan'  play;  because  I  had  been  more 
serving  and  had  accumulated  twice  afe  much  money,  I  don't  see  w) 
I  should  pay  ten  per  cent  and  you  only  five. 

Q.  Have  you  any  views  to  state  to  the  committed  on  this  forro. 
of  taxation?  A.  There  is  this  point  in  the  question  of  taxation; 
a  question  was  put  to  the  different  gentlemen,  as  regards  their 
opinion,  if  it  would  be  better  to  take  the  State  tax  —  levy  the 
State  tax  in  some  other  form,  and  relieve  the  real  estate  from  taxa- 
tion; only  the  local  taxation;  I  don't  indorse  that  theory;  I  think 
that  I  can  safely  say  almost  ninety  per  cent  outside  of  our  public 
offices  —  the  tax  that,  comes  into  existence  from  the  courts;  I 
should  say  that  ninety  per  cent  is  for  the  protection  of  personal 
property,  and  why  should  real  estate  bear  the  burden,  which  they 
derive  but  little  benefit  from;  now  you  know  as  well  as  I  do  that 
as  far  as  my  farm  is  concerned  it  is  safe  from  theft;  they  might 
steal  my  horse;  it  is  personal  property;  if  a  burglary  is  committed 
he  breaks  the  lock;  but  what  does  he  break  the  lock  for;  to  steal 
my  money  —  to  steal  my  personal  property;  if  there  was  none  in 
the  house  he  would  not  commit  burglary. 

Q.  Would  you  favor  the  adoption  of  the  local  option  system  by 
which  each  locality  can  regulate  the  proportion  of  tax  to  be  paidj 
by  real  estate  and  personal  property?  A.  The  principle  of  the  bill, 


431 

as  I  understood  it,  last  year  was  that  eack  county,  through  the 
action  of  the  board  of  supervisors,  the  State  tax  should  be  levied 
upon  the  same  principle  that  it  is  now,  but  as  far  as  the  local  tax 
is  concerned  they  should  have  the  right  to  say  whether  it  should 
be  upon  the  land  and  its  improvements  or  upon  the  land  alone, 
or  upon  the  same  principle  that  the  tax  is  levied  now  upon  the 
real  and  personal  property;  now,  in  certain  counties,  it  might  be 
very  improper,  and  I  would  say  right  here  in  our  own  county; 
this  board  of  supervisors  is  largely  in  the  city  interests,  and  thus 
they  could,  if  they  saw  fit,  put  it  upon  land  alone,  and  then  what 
position  would  we  occupy  in  raising  the  taxes  to  defray  the 
expenses  of  this  county?  It  would  be  the  Henry  George 
principle  precisely;  that  is,  taking  the  local  option  bill  that  was 
introduced  last  winter. 

Q.  You  think  that  in  a  county  like  Albany,  where  there  are  two 
cities  like  Cohoes  and  Albany,  they  could  combine  and  impose  a 
heavy  burden  apon  the  country  towns?  A.  Yes,  sir;  I  am  for  a 
uniform  State  law;  if  you  leave  it  to  counties,  how  long  would  it 
be  that  a  town  would  want  the  same  principle  —  the  control  by 
their  town  board,  that  the  people  should  levy  their  taxes  as  they 
saw  fit;  no;  I  think  the  wise  principle  is  that  the  State  of 
York  shall  have  one  general  law  for  the  State. 


By   the   Chairman. 

Q.  Have  you  given  any  attention  to  the  amount  of  tax  that  the 
county  of  Albany  really  contributes  to  the  support  of  the  State 
government?  A.  No,  sir;  I  have  not  paid  any  attention  to  it. 

Q.  The  county  of  Albany  last  year  contributed  towards  the 
support  of  the  State  government  $125,513.82;  it  received  back  from 
the  State,  for  school  purposes,  $91,474.80,  thereby  showing  that 
the  total  amount  contributed  by  the  county  of  Albany  was  only 
$34,039.02?  A.  But  did  you  substract  the  difference  as  regards 
the  State  tax  when  the  county  of  Albany  paid  in  her  amount 
towards  this  school  fund;  is  that  the  difference  from  that? 

Q.  Xo,  sir;  altogether  for  school  purposes,  and  all  she  paid  was 
the  first  sum  named  bv  me;  then  she  received  back  the  second, 


432 

showing  that  the  amount  not  contributed  by  the  county  of  Alb 
was  only  f 34,059.02?    A.   That  does  not  change   the   positic 
supposing  the  county  of  Albany  was  only  worth  f  1,000,  when 
paid  her  proportion  of  tax  she  paid  just  as  much  as  the  city 
New  York  if  the  city  of  New  York  was  worth  1,000,000,000,000. 

By  Mr.  Ainsworth. 

Q.  If  the  balance  of  the  tax  which  the  county  of  Albany 
was  a  tax  created  by  Albany  for  local  purposes,  and  the  gr 
mass  of  personal  property  which  escapes  taxation  is  situated 
the  city  of  New  York,  if  you  eliminate  the  State  tax  you  niig 
tax  all  you  have  in  New  York  city  and  not  reduce  your  local  t 
in  Albany?  A.  No,  sir;  not  a  bit;  our  local  tax  is  raised  by  ou 
own  corporations;  as  far  as  that  is  concerned  we  claim  that  the 
city  of  Albany  does  not  pay  its  just  proportion  as  far  as  our  local 
tax  is  concerned;  we  claim  as  to  the  city  of  New  York,  or  Kings, 
or  any  other  county  where  there  is  a  city  that  the  city  does  not; 
pay  its  proportion  of  the  tax  with  the  county. 

Q.  Take  Warren  and  Delaware  and  Lewis,  where  there  are 
cities;  would  that  help  those  counties  where  there  are  no  citi 
A.  It  would  to  this  extent;  here  is  Mr.  Collins;  has  $10,000 
bonds  and  mortgages,  and  he  doesn't  pay  any  tax;  if  those  bonds 
and  mortgages  were  taxed  to  him  it  would  be  an  alleviation  of  the 
principal  of  taxtion  as  it  is  to-day;  your  son  starts  out  and  buys 
a  farm  worth  $10,000,  and  your  means  are  limited;  you  give  him  as 
good  a  team  as  you  can,  with  two  or  three  cows,  to  start  him  on 
the  farm;  Mr.  Collins  has  a  farm  right  adjoining  worth  the  same 
money;  Mr.  Collins  has  $3,000  worth  of  personal  property,  and  your 
son  only  seven  or  eight  hundred  dollars,  and  your  son  has  to  pay 
as  much  as  he  has. 


By  the  Chairman. 

Q.  So  far  as  the  difficulty  lies  in  Albany  county  is  it  not  large! 
due  to  the  failure  to  properly  execute  the  laws  as  they  wtand  on 
the  statute  books  to-day?  A.  That  is  it  precisely;  but  there  comes 
another  point  in,  and  that  is  this;  there  ought  to  be,  and 
seems  to  me  there  could  be,  some  law  that  would  reach  a 


433 

and  I  know  of  nothing  to  make  a  man  come  up  to  the  rack  unless 
you  operate  on  his  pocket  in  some  way  or  other;  I  know  an 
^instance  right  in  niy  town  from  my  own  knowledge  that  would 
Jcouie  right  up  there  and  swear  as  regards  bonds  and  mortgages; 
Ley  would  swear  off  one-half. 

Q.  Why  don't  you  pursue  them  for  perjury?     A.  There  is  the 
juliarity;  why  don't  this  man  or  that  man  all  over  the  country; 
rhy  don't  they  shove  everybody  that  violates  the  law? 
Q.  You  own  personal  property  on  your  farm?     A.  Yes,  sir. 
Q.  Are  you  assessed  for  personal  property?     A.  No,  sir. 
Q.  Have  you  ever  gone  to  the  town  board  of  assessors  to  com- 
lin  that  they  did  not  execute  the  law  properly?     A.  Yes  sir;  I 
ive  complained  to  the  assessors  that  they  did  not  put  up  our  town 
it  its  full  valuation. 

Q.  Have  you  ever  gone  to  the  board  of  assessors  and  .said: 
Here  I  am,  Mr.  Johnson,  and  I  own  personal  property,  and  I 
iist  that  you  perform  your  duty  by  assessing  me?"  A.  They 
rould  think  I  was  an  angel  if  I  did  that. 

Q.  Would  not  that  be  a  fitting  example,  and  have  something  to 
with  making  them  perform,  their  duty?  A.  I  don't  know  as  it 
rould;  the  point  is  this:  The  assessor  is  sworn  to  do  thus  and  so; 
is  sworn  to  tax  to  the  full  amount ;  it  has  not  been  done. 
Q.  Have  you  ever  heard  the  objection  raised  that  if  they 
*ed  personal  property  locally  that  it  would  draw  to  your  town 
county  an  added  proportion  of  the  State  and  county  levy;  is 
>t  true  that  if  the  assessors  of  the  town  in  wnich  you  live 
mid  assess  every  dollar  of  personal  property  that  it  would  'Iraw 
your  town  a  larger  proportion  of  the  county  and  State  tax, 
hich  is  placed  arbitrarily  upon  this  personal  assessment  without 
i.v  regard  to  equalization?  A.  That  is  a  fact. 
Q.  That  being  true,  is  it  not  a  strong  temptation  to  tin-  local 
jsors  to  avoid  the  assessment  of  personal  property  because 
brings  an  added  county  and  State  tax  to  that  town  to  be  paid? 
To  a  certain  extent,  for  this  reason;  for  instance,  I  will  illus- 
ite:  it  is  only  a  few  years  ago  that  the  town  of  New  Scotland  -  - 
iey  c;ime  rijiht  here  to  the  county  clerk's  office  and  looked  over 
'c  bonks  and  put  everybody  on  thai  was  on  record  —  I  g 


434 


everybody;  I  have  heard  how  much  they  raised  from  personal 
property;  I  think  William  H.  Clark  kicked  over  it;  I  never 
of  any  other  town  in  our  locality  only  the  town  of  New  Scotia 
of  course,  their  taxes  were  higher,  but  if  this  was  a  gem 
principle  of  law  so  that  it  would  bring  that  whole  thing  all  o1 
the  State,  taxation  would  be  less  than  it  is  to-day. 

By  the  Chairman. 

Q.  Do  yon  know  as  a  fact  that  the  large  majority  of  the  counl 
receive  more  money  back  than  they  actually  pay  to  the  State! 
A.  I  guess  they  do,  some  of  them. 

Q.  For  instance,  the  county  of  St.  Lawrence,  last  year,   con 
tributed  toward  the  State  government  $36,647.98,  rind  receive 
back  from  the   State  for  school  purposes   $80,007.73;   in  otl 
words,  they  received  back  $43,359.75  more  than  they  paid? 
Xo\\\  then,  suppose  that  St.  Lawrence  county  pays  a  tax:  on 
personal  property,  wouldn't  she  add  nearly  one- third  more  t 
she  paid  last  year;  there  is  the  point;  I  think  I  could  safely 
that  if  Albany  county  paid  her  tax  upon  her  personal  propei 
that   she  would  pay   considerably  over  one-third  more. 

Q.  Do  not  those  figures  indicate  that  whatever  burden  qfl 
taxation  there  is,  it  is  all  attributable  to  local  conditions,  and  th« 
it  is  not  the  State  that  is  punishing  those  towns?  A.  The  StatH 
tax  is  not  so  large  as  the  local  tax. 

Q.  Now,  the  city  of  New  York,  to  whom  every  man  looks  who 
has  a  grievance  on  the  subject  of  taxation,  paid  to  the  State) 
$1,694,054  more  than  she  received?     A.  How  much  more  would 
*he  pay,  suppose  she  paid  taxes  upon  all  her  personal  property 
on  the  same  basis. 

Q.  What  benefit  would  that  be  to  this  burden  on  counties j 
that  we  speak  of?  A.  On  their  local  taxes  it  would  not  be  any, 
benefit. 

Q.  As  a  mauer  of  fact,  forty-five  out  of  the  sixty  get  back  \ 
than  they  pay  to  the  State,  so  that  is  conclusive  proof  of  tUej 
fact  that  whatever  their  burdens  are  by  way  of  taxation 
all  from  local  causes?    A.  Exactly  so. 


4:35 

Q.  Don't  yon  think  that  the  real  cause  is  the  failure  on  the 
I  part  of  the  officers  to  execute  the  laws  that  exist?  A.  The  point 
I  is,  there  is  not  anybody  can  find  any  fault  with  the  law,  because 
I  it  says  that  all  property  shall  be  taxed  on  a  fair  basis,  but  there 
I  is  something  needed  to  bring  men  to  that  standard  to  make 
them  pay  on  the  property  they  own. 

Q.  Don't  you  think  that  th<i  farmers,  instead  of  meeting  and 
preaching  about  their  grievances,  if  they  would  meet  and  devise 
means  for  making  those  officers  perform  their  duties  under  the 
Itiw,  it  would  be  more  beneficial?  A.  In  the  first  place  the 
Legislature  made  a  law  that  every  farmer  could  put  his  money 
the  bank  and  not  pay  a  tax;  the  Legislature  held  out  the 
dea  that  that  was  for  the  interest  and  the  benefit  of  the  poor; 
t  was  to  a  certain  extent;  but  I  will  say  this,  was  it  not  three 
es  more  for  the  interest  and  the  building  of  the  banks  than 
t  v/as  for  the  interest  of  the  poor,  was  it  not  for  the  principle 
the  banks  making  money  on  it? 

Q.  Getting  back  to  my  proposition,  and  taking  a  purely  agri- 
tural   county,   Warren,   Wyoming  or  Washington;   don't  you 
lieve  that  if  the  farmers  should  organize  there  in  those  respect- 
e  counties  with  a  single  view  of  making  the  local  officers  dis- 
harge  their  duty  under  the  law,  that  it  would  be  productive 
t  good  results?    A.  Yes,  sir;  it  would  be  just  the  same  as  I 
d  you  about  the  town  of  New  Scotland;   that  would  bring 
;hose  bonds  and  mortgages  to  the  front;  but  then,  as  far  as  the 
oney  in  the  bank  is  concerned,  that  they  could  not  touch. 
Q.  That  is  one  channel  through  which  money  escapes  taxation? 

Yes,  sir. 

Q.  What  part  does  that  play  in  a  purely  agricultural  county? 
Not  so  large  in  extent,  unless  as  the  question  came  up,  for  the 
icers  were  in  duty  bound  or  made  to  bring  out  all  those  bonds 
mortgages,   and    that  very  operation    would    throw    more 
ney  in 'the  banks,  and  there  would  be  less  bonds  and  mortgages 
thus  the  real  estate  would  be  more  injured  and  the  banks 
roiild  be  benefited. 


4.16 

Q.  But  if  those  complaints  are  well  grounded  that  go  up  from 
the  agricultural  counties  of  the  State  we  must  assume  that  there 
is  not  a  great  deal  of  money  there  to  accumulate  in  banks;  what 
have  you  to  say  to  that  phase  of  it?  A.  It  is  a  matter  of  fact 
that  in  the  country  people  don't  put  so  much  money  in  the  bank, 
unless  it  is  in  the  tax  bank,  as  they  do  in  the  city. 

Q.  So  that  therefore  the  non-assessment  of  money  in  savings 
banks  in  the  agricultural  county  does  not  play  a  very  important 
part  does  it?  A.  Every  f  100  you  take  out  of  the  county  is  a  $100 
less,  and  it  is  not  fair  that  I  should  pay  a  tax  one  $100  when  you 
put  yours  in  the  bank  and  don't  pay  any. 

Q.  Suppose  that  the  law  was  enforced  as  it  is,  bearing  in  mil 
of  course,  that  it  does  not  reach  money  in  banks,  would  it  not 
have  a  very  beneficial  effect?     A.  Yes,  sir;  there  is  no  mistal 
about  that. 

Q.  Don't  you  think  that  the  people  of  those  counties  hai 
sufficient  sovereign  power  to  make  the  officers  discharge  their 
duty  under  the  law?  A.  Yes,  sir;  if  they  would  take  it  in  hand 
and  do  it. 

Q.  Would  it  not  be  more  profitable  for  the  farmers  to  meet  with 
that  end  in  view  than  to  proclaim  to  the  world  their  grievance 
from  time  to  time,  and  simply  end  in  preaching?  A.  That  seems 
to  be  a  general  principle  in  most  everything  that  comes  up;  this 
principle  of  taxation,  or  this  principal  of  the  assessors,  has 
become,  as  we  might  say,  a  dead  letter;  it  is  a  good  deal  like  our 
excise  laws;  a  man  could  not  drink;  a  man  is  a  criminal  if  he 
gets  drunk  on  the  streets;  nobody  arrests  him  in  the  country;  in 
the  city  he  is  picked  up  and  goes  to  jail;  as  far  as  taxation  is 
('oi)cci-ii('d,  with  the  assessors  there  is  not  much  difference 
between  the  city  and  the  country;  for  instance,  goods  in  a  store 
is  not  assessed  in  the  city  except  in  a  very  few  cases,  and  neither 
are  they  in  the  country. 

Q.  But  the  city  does  not  complain;  we  hear  no  complaint  from 
the  cities?  A.  When  you  mention  the  laboring  classes  you  will 
find  that  they  complain  as  much  as  anybody  else;  they  will  start 
up  one  of  these  days  like  the  knights  of  labor. 


437 

A.  (love,  called  as  a  witness,  being  duly  sworn,  testified  as 
follows : 

l>y  Mr.  Hamilton. 

Q.  You  reside  in  the  town  of  Watervliet?    A.  Yes,  sir. 

Q.  You  are  a  farmer?     A.  Yes,  sir. 

Q.  And  have  been  for  a  number  of  years?  A.  Yes,  sir;  fifty 
years. 

Q.  You  have  heard  the  views  expressed  by  Mr.  Spalding  and 
Senator  Collins  on  taxation?  A.  Yes,  sir. 

Q.  Do  you  concur  in  their  views?  A.  I  do  in  all  except  the 
Senator's  canal  ideas;  I  don't  agree  with  him. 

Q.  You  believe  that  such  views  are  very  generally  entertained 
by  the  farming  community?  A.  Yes,  sir;  I  think  so. 

Q.  Have  you  any  particular  views  to  express  to  the  committee? 
| A.  Not  any;  I  think. 

My  the  Chairman. 

Q.   What   do   you   think  if   farmers   would   organize   in   their 
[different  localities  and  insist  upon  the  performance  of  duty  upon 
ie  part  of  assessors?    A.  I  think  it  would  be  a  good  idea;  I  think 
nortij'ages  should  be  taxed. 

Q.  Do  you  believe  that  the  holder  of  the  fee  as  now  should  be 
upon  the  full  value,  and  that  the  holder  of  the  mortgage 
mid  be  assessed?    A.  No,  sir. 

Q.  You  think  that  the  holder  of  the  property  ought  to  have  an 
llowance  equal  to  the  indebtedness?  A.  Yes,  sir. 
Q.  And  do  you  believe  in  allowing  for  indebtedness  on  the 
nation  of  personal  property;  for  instance,  a  man  owns  $10,000 
forth  of  personal  property  and  he  swears  he  has  an  indebtedness 
)f  $5,000,  would  you  tax  him  for  five  or  ten  thousand  dollars?  A. 
would  tax  him  for  five. 

Jacob  Waterman,  called  as  a  witness,  being  duly  sworn,  testified 
follows: 
By  Mr.  Hamilton. 

Q.  You  reside1  in  the  town  of  Watervliet?     A.  Yes,  sir. 
Q.  You  are  engaged  in  what  business?    A.  I  hate  to  say  that 
am  a  farmer,  because  they  all  do;  I  am  a  tiller  of  the  soil. 


438 

Q.  How  long  have  you  been  so?    A.  All  my  life. 

Q.  You  have  heard  the  testimony  of  Mr.  Spalding  and  Senator 
Collins  and  Mr.  Johnson  and  Mr.  (love  in  regard  to  the  question 
of  taxation  under  investigation  by  this  committee?  A.  Yes,  sir. 

Q.  Do  you  concur  generally  in  the  views  expressed  by  them?    A. 
I  do;  with  the  exception  of  Mr.  Gove,  I  can  not  indorse  his  a 
theory;  I  indorse  Mr.  Collins7  theory. 

Q.  Have  you  any  other  views  than  those  they  have  exprc 
to  this  committee?    A.  I  don't  know  that  I  have;  they  have 
expressed  it  quite  freely. 

By  the  Chairman. 

Q.  Did  T  understand  you  to  say  that  you  indorsed  Senator 
Collins'  idea  about  the  canals?  A.  Yes,  sir. 

Q.  You  believe  in  filling  them  up?    A.  Yes,  sir. 

Q.  They  have  outlived  their  usefulness?    A.  Yes,  sir;  I 
lived  in  sight  of  them  for  forty  years. 

Jason  V.  Haswell,  called  as  a  witness,  being  duly  sworn,  testified 
as  follows: 

By  Mr.  Hamilton. 

Q.  Where  do  you  reside?    A.  Bethlehem  Centre,  Albany  county. 

Q.  You  have  been  engaged  as  a  farmer?    A.  All  my  life. 

Q.  Have  you  heard  the  testimony  of  Messrs.  Spalding,  Collins, 
Johnson,  Gove  and  Waterman?  A.  Yes,  sir. 

Q.  Do  you  believe  that  they  have  truly  represented  the  sentiments 
of  the  farming  community  of  your  neighborhood?  A.  Yes,  sir; 
as  far  as  they  go. 

Q.  And  also  you  concur  in  those  views?  A.  To  a  large  extent; 
in  a  general  way. 

Q.  Have  you  any  particular  views  to  present  to  the  committee 
in  regard  to  the  question?  A.  Yes,  sir;  I  will  say  that  I  have  heard 
a  general  complaint  for  many  years,  that  the  existing  laws  either 
do  not  give  assessors  the  proper  source  of  information  to  tax  per- 
sonal property  in  the  way  it  should  be  to  make  it  bear  its  proper 
burden  as  compared  with  real  estate;  and  those  who  look  at  it 
fairly  do  not  claim  that  the  owners  of  real  estate  in  the  country 
are  the  only  sufferers;  they  claim  those  in  the  cities  are  the  same, 


±39 


I  only  that  the  burden  can  be  shirked  more  on  tenants  in  the  cities 
than  it  can  be  in  the  country;  the  general  complaint  is  that  the 
better  class  has  to  pay  taxes  on  what  they  owe  and  own  —  on 
their  own  property  and  their  debts;  I  could  not  say  how  the  law 
of  last  year  operated  in  regard  to  swearing  on*  a  certain  class 
of  personal  property;  he  has  to  get  exemption  by  debts;  the 
general  belief  has  been  that  there  was  an  inequality  between 
rsonal  property  and  real  estate; -that  is  a  question  generally  dis- 
.ssed  in  our  league  and  the  general  conclusion  has  been  just  as 
saj  in  that  particular. 

By  the  Chairman. 

Q.  Outside  of  the  discussions  in  the  league,  have  you  made  any 
forts  to  have  the  law  enforced,  defective  as  it  is?  A.  Yes,  sir; 
spoke  to  the  assessors  last  year,  and  they  told  me  if  a  listing 
v  was  passed  it  would  give  them  more  information,  with  proper 
ueguards,  that  they  could  assess  a  much  larger  percentage  of 

mal  property. 

Q  Did  they  ever  put  the  question  to  you  as  to  whether  you 
>wntd  personal  property?    A.  Yes,  sir;  I  have  had  them  propound 
it  question  to  me;  all  I  could  say  I  owned  was  such  as  was 
iccestary  to  operate  my  farm;  if  the  law  required  it,  I  would  be 
to  pay  it,  provided  all  other  classes  of  people  should  have 
sane  exemption  —  not  a  large  amount;  I  would  not  object  to 
law  tiat  would  tax  all  personal  property,  but  I  would  want  it 
be  aplied. 

Q.  Di(  you  ever  make  any  effort  at  those  meetings  to  ascertain 
I  whether  such  property  was  liable  to  taxation?  A.  I  have;  there 
(are  so  many  I  can't  remember  definitely. 

Q.  Ebn't  you  remember  as  to  getting  information  as  to  whether 
was  taxable?    A.  1  do  remember  having  gained  information, 
'but  it  3  several  years  ago;  I  don't  know  what  I  learned  at  that 
Itime. 

Q.  Dd  the  assessor  say  to  you  that  such  property  was  not  tax- 
)le?    ^.  I  don't  know  as  he  did. 

Q.  Yu  appear  to  have  been  very  easily  satisfied  with  their 
(answer}?  A.  I  concluded  we  had  to  take  the  law  just  as  it  was. 


•uo 

Q.  But  you  do  not  appear  to  have  made  any  effort-  to  ascei 
what  the  law  was?     A.  Not  of  every  assessor  every  time  he  cai 
around. 

Q.  You  have  never  read  the  law,  did  you?     A.  I  have  raid  som 
parts  of  it,  but  I  have  not  had  the  la\v   furnished  to  me  i<>  rea»l 
thoroughly;  that  is,  not  all  the  laws. 

Q.  What  do  you  think  of  the  idea  of  divorcing-  State  and  loi 
taxation  by  relieving  real  estate  of  all  taxes  for  Stale  purp< 
A.  I  have  thought  considerably  upon  it  and  read  upon  it  and  L 
hardly  prepared  to  say  that  I  would  favor  that  plan;  I  have  gener- 
ally  considered  it  was  best  to  make  all  kinds  of  property  contribute 
to  every  branch  of  government  outside  of  the  federal  government 
where  they  do  not  assess  directly;  I  am  not  sure  which  would  be 
best  in  that  case. 

Robert  A.  Van  iMizon,  called  as   a   witness,  beingr  duly  s\vo 
Testified  as  follows: 

By  Mr.  Hamilton. 

Q.  Where  do  you  reside?     A.  In    the  town  of  Berne,  All 
county. 

Q.  You  are  a  farmer?    A.  I  rent  a  small  piece  of  land. 

Q.  You  have  been  so  engaged  for  a  number  of  veal's?  A.  Y<-s( 
sir. 

Q.  Have  you  heard  the  testimony    of    the    several   win  esses? 

A.  Yes,  sir. 

| 

Q.  Do  you  concur  in  the  views  that  they  have  expressed  to  the 
committee?  A.  I  do  in  all  excepting  selling  the  canals  o-  filling 
them  up;  I  think  the  railroads  have  quite  a  monopoly  ;iul  they 

would  be  still  more  so. 

. 

Q.  Would  that  not  help  the  fanner?     A.  In  one  sense  ir  might. 

Q.  If  it  raised  th**  transportation  of  western  product*?  A.  ir 
would;  and  the  fanners  in  this  part  of  five  country  have  <>  buy 
a  good  deal  of  it. 

Q.  You  know  that  the  State  has,  by  statute,  regulat'il  the 
amount  per  mile  that  a  railroad  corporation  can  charge  i»r  tin? 
transportation,  can  charge  for  a.  passenpx»r?  A.  I  know  hat. 

(v>.   Don't   you   think   that  the  State  could  just   a»<  well   rpihn«» 


441 


the  amount  per  ton  that  the  railroads  Avould  chargp?  A.  Exactly; 
they  could  in  case  the  railroad  did  not  control  legislation. 

Q.  Then  you  are  one  of  that  kind  of  men  who  believe  that  public 
officers  can  not  be  trusted?  A.  They  can  be  trusted;  of  course 
they  can;  I  don't  believe  that  men  have  got  so  that  they  can  not 
be  trusted,  but  I  tell  you  what,  if  a  man  has  got  a  dollar  in  his 
pocket,  he  had  better  keep  his  hand  in  it. 

Q.  Suppose  that  simultaneously  laAvs  could  be  passed  to  do 
aAv:iv  Mith  the  canals,  and  one  to  regulate  the  carriage  of  freight, 
Avhat  would  you  say  then  to  that  joint  proposition?  A.  I  would 
say,  if  the  hnvs  could  be  made  to  regulate  the  carrying  of  freight, 
by  railroads  and  the  railroads  had  the  capacity  to  do  it;  I  would 
say  it  Avould  be  well  to  do  away  with  the  canals,  because  there  is 
a  great  deal  of  expense  to  the  taxpayers  of  the  State  by  reason 
of  the  canal. 

Q.  I  don't  believe  there  is  anybody  in  the  State  that  wrould 
favor  doing  away  with  the  canals  and  giving  the  railroads) 
license  to  charge  what  they  saw  fit;  coupling  the  two  together, 
would  you  be  in  faATor  of  doing  away  Avith  the  canals  in  case  the 
railroads  Avere  regulated?  A.  In  case  the  railroads  were  regu- 
lated; yes. 

Q.  You  would  not  eA^en  be  Avilling  to  have  it  done  at  the  saint1 
time?  A.  No,  sir;  I  would  want  to  know  that  the  railroads  \\ere 
fastened  first;  in  regard  to  bonds  and  mortgages,  I  would  say  that 

is  a  certain  fact  that  there  is  an  unjust  discrimination  in  taxn- 

m  between  real  and  personal  property;  that  the  money  lender 
iving  on  the  interest  of  his  money,  which  he  has  a  right  to  do, 

id  under  the  law  it  is  considered  property  —  I  think  but  very 
ittle  of  any  man  or  set  of  men  that  wants  to  live  under  a  govern- 
ment and  be  protected  by  the  laws,  that  is  not  willing  to  pay 
anything  to  Avar  ds  the  support  of  it. 

Q.  What  have  you  to  say  of  a  man  Avith  seven  or  eight  children 
who  contributes  nothing  but  gets  them  educated  at  the  public 
expense?  A.  In  the  first  place  a  man  that  has  got  nothing,  th"iv 
is  not  anything  expected,  either  under  the  moral  or  political  laws; 
sins  of  the  ignorant  should  be  winked  at,  my  bible  teaches 
56 


me;  it  is  right  that  the  public  is  willing  to  educate  our  children 
if  we  are  not  able  to  educate  them;  I  believe  in  compelling  them 
all  to  be  educated. 

Q.  What  would  you  say  of  each  county  in  the  State  educating 
its  own  children?  A.  I  would  be  opposed  to  that;  I  do  not  believe 
in  cutting  those  things  up;  I  would  have  a  general  tax  law;  I 
would  not  cut  that  up. 

Q.  You  are  not  in  favor  of  relieving  real  estate  for  State  pur- 
poses? A.  I  don't  think  that  would  work  very  well;  it  looks  as  if; 
it  would  be  a  little  schemy. 

Q.  Suppose  we  could  get  money  enough  from  taxing  corpora- 
tions, and  collateral  and  direct  inheritance  to  support  the  govern- 
ment? A.  Then  I  propose  to  divide  up  with  the  poor  counties.  « 

Q.  You  would  be  in  favor  of  taxing  property  in  New  York  for 
the  benefit  of  the  men  who  reside  in  Wyoming  county?    A.  Yes, 
sir;  to  that  extent;  how  many  dollars  did  you  say  was  raised 
the  city  of  New  York;  something  over  a  million  more  than 
received  back;  if  the  money  that  is  employed  there  in  bonds  an< 
mortgages  —  if  the  tax  had  been  paid  on  that,  how  many  million  :  | 
more  surplus  would  we  have  had  in  our  State  treasury  to-day  than 
we  have  got  now. 

Q.  Would  you  be  in  favor  of  taxing  that  1,000,000  and  over  and 
applying  it  to  the  local  purposes  of  Wyoming  county?  A.  I  would 
if  Wyoming  county  is  not  able  to  support  her  local  government,  1 
would  be  in  favor  of  doing  it. 

Q.  Suppose  that  you  lived  in  the  county  of  New  York  and  were 
paying  taxes  there,  how  would  you  feel  about  contributing  to\\  ard 
the  support  of  the  local  government  of  Wyoming  county?  A. 
I  should  feel  it  was  just  if  I  was  worth  a  million  to  help  to  pay  the 
taxes  of  a  man  worth  fifty  dollars. 

Q.  Would  not  that  lead  to  abuse  in  Wyoming  county?  A.  No, 
sir;  I  don't  think  it  would;  it  is  not  large  enough  and  not  large 
enough  population  to  lead  to  very  great  abuse. 

Q.  Wouldn't  that  lead  them  to  engage  in  extravagant  expenses? 
A.  No,  sir;  not  if  properly  controlled. 


443 

Q.  Yon  concede  that  you  can  not  control  those  local  offices  now? 
A.  That  is  very  true,  because  the  law  seems  to  be  lax;  we  had  a 
man  in  the  town  last  year,  the  day  before  it  was  the  first  time 
for  the  board  to  meet  he  found  out  that  he  had  been  taxed  for 
$40,000  in  bonds  and  mortgages,  and  he  simply  moves  out  of  the 
town  fmd  aAToids  it. 

Q.  It  was  the  duty  of  the  assessors  where  he  went  to  assess  him? 
A.  By  the  time  that  they  get  ready  to  assess  him  he  is  over  in 
New  Scotland. 

Q.  It  was  not  the  fault  of  the  law?  A.  The  assessors  had  to 
(meet  on  a  certain  day  to  fix  it;  he  ascertained  the  assessors  had 
to  meet  that  day. 

Q.  He  was  somewhere  that  day?    A.  Yes,  sir. 

Q.  Wherever  he  was  it  was  their  duty  to  assess  him?  A. Yes, 
sir;  he  moved  to  Schoharie  county  to  avoid  paying  taxes  cm  that 
|  $40,000. 

Q.  What  remedy  do  you  suggest  that  would  catch  such  a  man 
I  as  that  ?  A.  About  the  best  remedy  would  be  to  lock  him  up 
(awhile,  I  guess. 

Q.  Tell  us  how  to  reach  him  to  lock  him  up?  A.  Notify  him 
I  that  he  has  been  assessed  for  that  amount  of  money  and  to  appear 
such  a  day  no  matter  where  he  was,  anywhere  within  the  bounds 
of  the  United  Srates,  and  if  he  did  not  appear  that  the  tax  should 
be  levied  against,  him  if  he  had  any  property  in  the  town,  no 
I  matter  what  it  was,  or  any  in  the  State,  no  matter  what  it  was. 

Q.  You  think  you  ought  to  reach  him  anywhere  in  the  United 
IStates?  A.  Anywhere  in  the  State. 

Q.  You  would  do  away  with  the  present  political  divisions  of 
[comities  and  towns?  A.  That  would  not  do  away  with  it  any 
tore  than  it  would  do  away  with  me  if  I  lived  in  Erie  county,  it* 

was  an  officer  and  had  a  warrant  to  come  down  here  to  arrest 

man  here  in  A Ibany  county  and  take  him  back  there;  that  would 

)t  make  any  political  division  as  I  see;  if  it  works  well  in  one 

ise  it  would  in  another. 

Q.  Would  you  take  him  where  they  had  jurisdiction  over  the 
)ffense?  A.  Yes,  sir. 


nti- 


444 

Clinton  Fonda,  called  as  a  witness,  being  duly  sworn,  testified 
as  follows: 

By  Mr.  Hamilton. 

Q.  Where  do  you  reside?    A.  Town  of  Water vliet. 

Q.  What  is  your  business?    A.  Farmer. 

Q.  Ton  have  been  engaged  in  that  for  a  number  of  years?    A. 
.All  my  life. 

Q.  You   have  been  present  at  the  examination  of  the  otlic: 
witnesses?     A.  Yes,    sir. 

Q.  Do  you  concur  with  the  views  expressed  by  the  witnessed 
generally  on  the  question  of  taxation?    A.  Yes,  sir. 

Q.  So  far  as  they  affect  the  agricultural  interests  of  the  Sta 
A,  I  do. 

Q.  You  be]ieve  the  sentiments  expressed  represent  the  sen 
ments  of  the  farming  community?  A.  Yes,  sir;  I  have  heart! 
this  thin^  discussed  at  our  leagues,  and  those  men  who  have 
talked  this  afternoon;  I  think  it  is  generally  understood  t 
what  they  said  is  indorsed. 

Q.  Have  you  any  particular  views  to  add  to  those  that  y 
have  stated  to  the  committee?  A.  No,  sir;  I  think  they  ha 
been  fully  expressed. 

The   committee  went  into  executive   session,   and  on  inotiol 
decided  to  meet  in  New  York,  January  23,  1893,  at  11  a.  ID. 


Meeting  of  the  Joint  Taxation  Committee. 

, 

New   York,   January  28.    lsO.°>. 
Superior  Court,  Part  II. 
The   committee  met  pursuant  to   call. 

Theodore  W.  Myers,  called  as  a  witness,  being  duly  sworn,  testi- 
fied  as   follows: 

liy   Mr.   Hamilton. 

Q.  You  aiv  comptroller  of  the  city  of  New  York?     A.   Yes.  sir. 
Q.  You  have  been  such  for  how  many  vears?     A.  Since  ! 


445 


Q  Your  duties  call  you  in  charge  of  the  matters  of  the  raising 
I  of  taxes?  A.  In  the  matter  of  collection  of  taxes;  not  raising. 

Q.  And  also  investigation  of  the  sources  of  supply?  A.  Hardly 
I tli at;  we  shnply  have  the  collection  of  the  taxes. 

Q.  1  H)  you  not,  as  a  member  of  the  board  of  apportionment, 
•  determine  on  the  amounts  to  be  raised?  A.  No,  sir;  simply  the 
I  amounts  of  expenditures, 

(-J.  Have  you  read  the  resolution  under  which  this  committee 
is    appointed;   have   you   read   the   resolution   contained   in   the 
|snbpeiia?    A.  Yes,  sir. 

Q.  What  have  you  to  say  then  to  the  committee  as  to  the 
ropriety  of  modifying  the  present  laws  relating  to  taxation, 
ssinent  and  interest  so  far  as  they  affect  the  various  business 
terests  of  the  State?    A.  I  agree  with  a  great  deal  that  has 
n  said  to  the  committee  as  to  the  modili cation  and  rearrangc- 
ent  of  the  tax  laws,  in  so  far  as  I  think  the  county  taxes  shouJd 
separated  —  State  and  county  taxes  should  be  separated. 
Q.  You  mean  you  are  in  favor,  if  possible,  of  a  system  by  which 
e  counties  will  be  relieved  from  the  necessity  of  contributing  to 
e  State  taxes  ?     A.  I  believe  that  the  State  should  collect  its  tax 
rect  —  by  a.  direct  tax. 

Q.  Have  you  examined  or  formed  an  opinion  upon   what  is 
own  as  the  local  option  tax  law,  by  which  the  localities  would 
permitted  to  determine  the  extent  to  which  personal  property 
ould  be  assessed,  if  at  all?    A.  Yes,  sir. 

Q.  What  are  your  views  upon  that  question?    A.  As  far  as 
ew  York  county  is  concerned,  I  think  personal  taxes  have  been 
ved  to  be  a  great  failure;  that  we  are  unable  to  collect  them; 
fact,  that  the  law  in  that  respect  has  been  a  dire  failure. 
Q.  Is  the  failure  owing  to  the  insufficiency  of  the  law  or  to 
lax  enforcement?    A.  No;  it  is  owing  to  the  impracticability 
the  law;  it  is  an  almost  impossible  law  to  enforce,  and  as  long 
there  are  people  who  make  up  their  minds  to  evade  it  it  is  a 
w  that  can  be  easily  evaded,  except  by  the  poorer  class  of  people 
ho  can  not  evade  it. 


446 

Q.  Do  you  believe  that  the  business  interests  of  this  city 
would  be  promoted  by  the  removal  of  the  tax  upon  personal  prop- 
erty? A.  I  certainly  do. 

Q.  Do  you  believe  that  to  be  the  prevailing  sentiment  of  the 
business  community  in  this  city?  A.  I  am  certain  it  is;  I  not 
only  think  that  this  city  would  be  benefited  by  dividing  the  lc 
from  the  State  tax,  but  I  believe  the  counties  would  be  benefit 

Q.  Would  you  explain  where  the  benefit  would  follow  to 
counties  largely  engaged  in  agricultural  pursuits?  A.  Simpli 
that  the  tax  —  where  the  tax  would  be  collected  by  counties,  th( 
tax  on  agricultural  lands  should  be  collected  by  the  county  itsel 
and  the  tax  on  city  lands  would  be  collected  by  the  county 
which  the  property  was  situated,  and  that  the  tax  on  farmnij 
land  is  easy  to  follow,  whereas  the  tax  on  city  real  estate  'u 
impossible  to  follow;  it  is  paid  by  the  tenant  and  not  by  1lie 
owner;  if  the  tax  is  higher  on  a  piece  of  city  real  estate,  natural 
the  landlord  puts  up  his  rent,  but  if  it  is  the  same  on  the  fai 
land,  the  agriculturist  that  produces  a  certain  amount  sends  it 
the  market;  he  can  not  put  up  his  product;  it  has  got  to  bring 
market  price. 

Q.  Except  in  localities  such  as  New  York  and  large  commercial 
centers,  what  benefit,  if  any,  would  follow  from  the  removal  of 
tax  upon  personal  property?  A.  The  tax  for  the  State  should  be 
a  direct  tax,  and  the  State  should  derive  its  income  from  sources 
such  as  by  a  tax  on  inheritances,  which  is  a  very  successful  tax 
now,  and  a  tax  upon  corporations,  and  naturally  the  relieving  the 
tax  on  personal  estate  would  unlock  capital  and  bring  it  to  the 
State. 

Q.  Bring  it  here  to  the  commercial  centers?  A.  I  don't  know 
as  it  would  any  more  than  what  it  is  now. 

Q.  In  your  opinion  the  removal  of  tax  upon  personal  property 
would  not  increase  the  commercial  importance  of  the  city  of  New 
York?  A.  Simply  to  open  the  doors  and  give  it  a  freer  vent,  and 
it  would  not  be  obliged  to  secrete  itself;  it  would  have  more  con- 
fidence; that  is  all. 

Q.  You  believe  that  the  capital  is  aU  here  but  it  is  hidden? 
A.  Yes  sir;  it  would  give  more  confidence  to  capital. 


447 

Q.  Your  argument  in  favor  of  relieving  it  from  taxation  is 
simply  on  acocunt  of  the  impossibility  of  enforcing  the  law? 
A.  Yes,  sir. 

Q.  Upon  the  broad  question  whether  it  should  in  justice  bear 
its  proportionate  share  of  the  public  burdens,  your  opinion  is 
that  it  should  be  taxed?  A.  Naturally  in  relieving  the  tax  on 
personal  property,  it  would  be  raised  from  other  sources — real 
estate. 

Q.  Have  you  any  suggestions  now  to  make  to  the  committee 
I  in  regard  to  any  more  modifications  of  the  present  law  upon  any 
of  those  subjects  based  upon  your  experience?  A.  I  made  out 
a  little  brief  which  I  believe  would  be  a  great  advantage  and 
which  would  bring  revenue  to  the  State;  I  will  read  it: 

[Proposed  Scheme  of  Revision  of  the  Tax  Laws  of  the  State 

of  New  York. 
1.  A  complete  separation  of  State  from  local  taxation. 

A.  Advantages. —  The   chief  advantages   to   be  derived   from 
this  are: 

(a)  Simpler  methods  of  taxation. 

(b)  The  abolition  of  the  clumsy  and  frequently  unjust  methods 
the  State  board  for  the  equalization  of  taxes,  to  whose  pro- 
ceedings many  counties  —  notably  ^ew  York  —  have  frequently 

tised  their  voices  in  protest;  and  the  consequent  doing  away 
ith  the  inducement  to  county  tax  assessors  to  place  upon  prop- 
erty an  abnormally  low  valuation. 

B.  How    accomplished. —  The  amount   of   State   tax   assessed 
[against   the   several   counties   of   the    State  has   been   steadily 

lecreasing  of  late  years.  This  has  been  due  chiefly  to  the 
icreased  amounts  received  directly  by  the  State  from  the  corpora- 
ion  and  succession  taxes.  It  would  therefore  require  a  compara- 
ively  small  increase  in  State  tax  to  entirely  relieve  the  counties 

un     contributing    directly    for    the    support     of    the    State 
>vernment. 

The  following  should  be  the  source  of  State  revenue: 

(a)  Succession  tax. —  The  rate  of  tax  should  be  the  same  as  that 
LOW  in  force,  but  all  exemptions  should  be  abolished.    When  the 


448 

collateral  inheritance  tax  was  first  passed  it  provided  only  for 
tax  of  live  per  cent  on  legacies  to  collateral  heirs  and  strangei 
Under  such  a  system  there  might  be  some  excuse  for  exernpti] 
religious  and  charitable  institutions  from  the  tax  and  preferrii 
them  to  ordinary  strangers  in  blood.  Now,  however,  the  tax 
been  extended  to  direct  inheritances,  and  under  the  act  of  1892 
is  the  estate  of  the  decedent  which  is  subjected  to  the  tax.  N( 
only  is  it  most  incongruous  and  unjust  that  colleges,  charil 
churches,  cemetery  companies,  bishops  and  so  forth,  should 
preferred  by  the  law  to  a  decedent's  own  sons  and  daughters, 
such  a  provision  greatly  increases  the  complexity  of  the  laws  and 
adds  to  the  difficulties  of  its  collection,  besides  causing  an  immei 
loss  of  revenue  to  the  State.  The  law  should  not  be  considered 
as  a  tax  upon  legatees,  but  as  a  deduction  which  the  State  makes 
from  the  entire  estate  of  decedent  before  allowing  them  to  be 
distributed  according  to  the  provisions  of  its  laws. 

2.  As  to  foreign  corporations,  by  the  passage  of  a  law  compelling 
them  under  adequate  penalties  to  file  certificates  of  incorporation 
with  the  Secretary  of  State  as  a  necessary  prerequisite  to  doing 
business  in  this  State,  and  to  pay  a  fee  upon  the  filing  of  such 
certificates  equal  to  the  amount  which  they  would  have  had  to 
pay  incorporated  in  this  State.  The  tax  is  one-eighth  of  one  per 
cent  in  this  State;  they  go  to  other  States  and  incorporate,  thereby 
depriving  this  State,  say  on  a  capital  of  f 500,000,  of  six  hundred 
and  odd  dollars.  Those  foreign  corporations  have  all  the  advan- 
tages that  a  domestic  corporation  has,  and  therefore  they  should 
be  compelled  to  file  for  doing  business  a  certificate  of  incorporation 
equal  to  the  amount  that  they  would  have  to  pay  otherwise. 

By  the  Chairman. 

Q.  So  far  as  the  act  of  incorporation  is  concerned  it  will  derive 
no  benefit  to  the  corporation  under  the  laws  of  the  State? 
No,  sir. 

Q.  It  would  answer  the  question  thai     the    incorporation  ti 
drives  capital  out  of  the  State?     A.  Yes,  sir. 

(c)  Tax  on   franchises  of  corporations: 
(1.)  Fire  insurance  companies. 


Eequire  the  officers  of  all  domestic  insurance  companies  other 
than  those  conducted  on  a  purely  mutual  plan,  to  make  report 
with  State  Comptroller  on  first  days  of  January  and  July  in  each 
year,  stating  amount  of  gross  premiums  upon  which  such  a  rate 
should  be  fixed  as  the  Legislature  may  determine.  Foreign 
insurance  companies  should  be  required  to  file  similar  reports  and 
to  pay  a  fixed  percentage  of  gross  premiums  received  from  busi- 
ness done  within  the  State  (a  two  per  centum  tax  of  this  character 
in  Pennsylvania  realized  $395,307.97  in  1891). 

(2.)  Transportation  companies,  including  railroads,  surface  lines, 
cables  and  electric  lines,  express  companies,  pipe  line  companies, 
telegraph  and  telephone  companies,  based  on  actual  value  of 
capital  stock  plus  indebtedness,  fixed  at  a  certain  rate  (to  be  deter- 
mined according  to  the  fiscal  needs  of  the  State)  and  assessed  in 
the  proportion  which  the  length  of  the  line  in  the  State  bears  to 
the  total  line  operated  (a  modification  of  the  Connecticut  law). 
(3.)  Banks. —  By  passing  a  law  bring  foreign  banks  on  a  parity 
domestic  banks,  i.  e.,  compelling  them  to  file  reports  with 
the  Banking  Department  of  the  State  and  provide  for  State  control 
(and  investigation,  similar  to  that  now  undergone  by  similar  domes- 
Itic  corporations.  This  having  been  done  both  domestic  and  foreign 
jbanks  might  be  made  to  bear  their  quota  of  State  taxation,  or  the 
ilwhole  matter  might  be  left  to  the  local  authorities  as  is  now  done 
the  case  of  domestic  banks.  The  present  preference  and 
Lvileges  of  foreign  over  domestic  capital  should,  in  any  event,  be 
dished. 

(4.)  Manufacturing  corporations,  same  as  now  existing,  except 
it  when  not  based  on  dividends  the  tax  shall  be  assessed  against 
tual  value  of  capital  stock  plus  indebtedness  instead  of  simply 
capital. 

By  Mr.  Ainsworth. 

Q.  I  wish  you  \vould  explain  what  you  meant  by  capital  stock 
indebtedness;  do  you  mean  the  tax  upon  the  indebtedness? 
On  the  bonded  indebtedness;  the  stock  plus  the  bonds;  tax 
bonds  which  we  rarelv  do  now. 


450 

Q.  Governed  by  the  rate  of  interest  which  they  pay?  A.  No; 
similar  to  the  method  adopted  in  banks. 

(d)  Each  county  should  be  allowed  to  raise  its  tax  for  local 
purposes,  in  a  manner  its  own  citizens  prefer;  this  would  be  the 
most  satisfactory  and  popular  step  in  the  direction  of  home  rule 
that  could  be  devised  in  relation  to  taxation. 

The  State  tax  having  been  provided  for,  no  county  could  feel 
that  it  was  being  unjustly  treated  by  the  methods  of  taxation  in> 
another  county.     The  overwhelming  demand  in  New  York  county! 
for  the  abolition  of  the  general  personal  property  tax  could  bei 
accomplished  without  friction  or  criticism.     At  present  New 
county  is  assessed  at  three^sevenths  of  the  total  real  estate  valua- 
tion of  the  State,  and  at  but  one-sixteenth  of  the  total  per> 
property  valuation,  a  fact  which  is  so  absurd  on  its  face  that  it- 
should  convince  the  rural  communities  that  no  tax  can  be  enforce! 
by  laws  however  stringent  which,  do  not  meet  with  the  app 
of  the  subjects  of  taxation. 

Many  trust  funds  now  held  for  the  benefit  of  widows  auj 
orphans  do  not  bring  in  an  income  of  more  than  four  per  reifl 
pei1  annum.  At  our  present  rates,  the  general  personal  propcrfl 
tax  would,  if  enforced,  deprive  these  beneficiaries  of  almost  onl 
half  of  their  means  of  subsistence.  This  amounts  10  coiiilsvl 
tion,  and  is  repugnant  to  the  moral  sense  of  the  cornuiuniifl 
Such  a,  law  can  never  be  enforced  and  its  present  existence  on 
statute  books  result  merely  in  a  more  or  less  efficacious  stifling) 
of  the  political  conscience  of  the  people.  The  laws  of  taxation; 
applicable  to  agricultural  communities  are  absolutely  antago- 
nistic to  those  relating  to  cities,  and  when  once  the  complete 
separation  of  State  from  county  taxation  is  made,  each  county 
will  be  free  to  adopt  such  a  system  as  will  best  meet  its 
and  be  most  successful  in  operation. 

Provision  should  be  made  giving  to  each  county  the  power  t< 
collect   revenue  from   the   franchises  of  corporations  exercising 
monopolistic  privileges  within  the  confines,  based  on  grants  o 
a  public  character,  such  as  elevated  railways,  gas  and  el- 
light  companies,  telegraph  and  telephone  companies,  streei 
face  lines,  etc..  etc.     The  amount  of  tax  paid  by  them  di; 


451 

to  the  State  should,  of  course,  be  deducted  from  the  local  rate 
just  as  is  done  at  present.  The  method  of  taxation  should  be 
the  same  us  in  the  State  tax  on  corporations  —  i.  e.,  based  on 
actual  value  of  capital  stock  plus  indebtedness,  fixed  at  a  certain 
rate  (the  annual  rate)  and  assessed  in  the  proportion  which  1he 
length  of  line  in  the  county  bears  to  the  total  value.  Nearly  all 
such  corporations  carry  on  their  business  wholly  within  the 
limits  of  a  single  county,  but  this  rule  would,  in  any  event,  pre- 
vent double  taxation. 

There  are  certain  '  things  so  noticeable  in  taxation.  For 
instance,  I  will  just  give  you  an  idea.  I  have  gone  over  this 
thing  with  some  little  care.  In  1891  the  tax:  collected  by  the 
Stale  on  insurance  companies  amounted  to  $121,840.23.  The  tax 
on  similar  corporations  collected  by  the  State  of  Pennsylvania, 
in  the  same  year,  was  $407,386.  It  is  believed  that  tin  se 
figures  are  too  eloquent  to  need  further  comment.  The  State  tax 
in  New  York  on  transportation  companies,  including  express 
companies,  steamboat  companies,  palace  car  companies  and 
pipe  line  companies,  for  the  year  1891,  was  $795,257.90.  The 
State  tax  of  Pennsylvania  on  railroads  alone,  for  the  same  year, 
was  *  1,1  20,751.  (This  excludes  $38,741  paid  for  account  of 
taxes*,  and  $549,535  paid  for  city,  township  and  borough  taxes.) 
The  State  tax  on  telegraph  and  telephone  companies,  for  the  \  ear 
1891,  in  New  York  State,  amounted  to  $22,615.53  on  earnings, 
and  $2^,224.88  on  capital,  making  a  total  of  $51,840.41, 

In  Pennsylvania,  for  the  same  year,  though  the  tax  regarding 
the  amount  of  business  done  and  value  of  property  invested  should 
have  been  very  much  less,  it  was  in  fact  almost  as  much,  namely 
(excluding  county  and  local  taxation),  $49,619.  The  Xew  York 
tax  ou  foreign  and  other  State  banks,  for  the  year,  amounted  to 
tlw  miserable  pittance  of  $36,182.02.  The  causes  of  this  failure 
of  the  law  have  been  so  completely  stated  in  the  annual  report 
of  Oomp{  roller  Wemple,  for  the  year  1891,  as  to  neei  no  fui'ther 
commentary  on  my  part.  The  State  tax  of  New  York  on  cor- 
porations, for  the  year  1891,  amounted  to  $1,350,338.53.  In  the 
same  year  Pennsylvania  (excluding  tax  on  organizing  and  other 
I  items  not  included  in  the  NewT  York  estimate)  collected 


5,227,S;;4.67.     The  only  tax  law  of  New  York  State  affecting 


452 

personal  property  of  corporations  which  has  operated  with  even 
moderate  success,  is  that  taxing  the  shareholders  of  banks,  and 
this  is  a  tax  made  to  operate  locally  and  assessed  and  collected 
by  the  several  counties  of  the  State. 

IVv*  Ihe  Chairman. 

Q.  To  what  do  you  attribute  this  difference?  A.  To  thJ 
unfortunate  condition  of  the  law;  in  the  jumble  in  which  the 
present  Jaw  is  it  is  most  confused. 

Q.  ]s  the  rate  about  the  same  here  as  it  is  in  Pennsylvania?  A. 
No,  sir;  it  is  less  here  than  there. 

By  Mr.  Malby.  M 

Q.  Would  you  advise  increasing  the  rate  and  also  the  facilities? 
A.  No,  sir;  I  would  not  advise  an  increase  of  the  rate;  our  oppor- 
tunities of  collection  are  so  much  greater  than  in  Pennsylvania 
that  with  the  rate  one-half  we  ought  to  collect  as  much. 

By  Mr.  Ainsworth. 

Q.  The  trouble  is  with  the  method  of  taxation?  A.  Yes,  sir; 
and  with  the  unjustness  of  the  tax  here,  the  discrepancies;  the 
law  is  so  mixed  and  so  confused  that  it  is  very  easy  to  evade; 
Connecticut  has  a  very  valuable  law  as  far  as  corporations  are 
concerned;  they  tax  the  capital  plus  the  indebtedness. 

Q.  Would  you  make  a  difference  in  the  rate  as  to  stock  which 
paid  dividends  and  that  which  does  not?  A.  That  is  regulated 
by  the  value  of  the  stock;  we  only  tax  upon  the  value;  a  stock 
that  has  not  paid  a  dividend  does  not  bring  the  same  price. 

Q.  That  presents  a  great  many  difficulties  as  to  what  the  value 
of  stock  is  that  pays  no  dividends;  stock  not  listed  on  1he 
exchange;  how  do  you  arrive  at  that  value;  the  earnings  to  the 
company  must  go  to  improvements  and  not  pay  a  dividend?  A. 
Yes,  sir;  and  therefore  the  bonded  indebtedness  should  be  taxed, 
because  a  great  many  companies  make  their  bonded  indebtedness 
so  heavy  that  their  stock  is  comparatively  worthless,  and  therefore 
they  evade  taxation. 

Q.  Would  you  make  a  difference  between  the  stock  of  a  cor- 
poration extremely  profitable  and  one  that  owing  to  its  exigencies 


453 

of  business  can  not  pay  anything;  how  would  you  arrive  at  that 
[•value?  A.  By  the  value  of  the  stock;  we  only  tax  on  the  value  of 
;  that  is  how  the  tax  is  raised,  not  on  the  value  of  the  corpo- 
ition;  it  is  raised  on  the  price  of  the  stock. 
Q.  But  you  and  I  and  the  chairman  are  three  stockholders;  a 
corporation  which  pays  no  dividends;  how  would  you  arrive 
it  the  value  of  the  stock,  it  not  being  quoted?  A.  By  the  sworn 
iflidavits  of  its  officers;  that  is  all;  and  if  the  bonded  indebtedness 
the  corporation  were  taxed  then  the  stock  would  be  of  minor 
iportance. 

By  the  Chairman. 

Q.  Don't  you  think  there  ought  to  be  a  right  in  inquiry  on  the 
irt  of  the  State  Comptroller  as  to  the  value?-  A.  Yes,  sir;  there 
ight  on  all  corporations. 

By  Mr.  Hamilton. 

Q.  What  do  you  say  as  to  whether  capital  has  been  or  is  being 
iven  from  the  State  by  reason  of  the  existing  laws  affecting 
•porations?    A.  I  don't  believe  it  has. 

By  Mr.  Ainsworth. 

Q.  Have  yon  seen  the  report  of  Governor  Abbett.  of  New  Jersey, 
regard  to  the  organization  of  corporations  in  that  State  where 

stockholders  reside  in  this?    A.  I  did  not  read  it;  I  think  I 
ird  something  about  it,  where  he  intended  to  increase  the 
>rporation  tax. 

Q.  I  think  it  is  a  report  he  has  recently  made  to  the  Legisla- 
in  which  he  gives  the  figures  of  capital  represented  by  cor- 

itions  in  that  State  where  the  stockholders  reside  in  this,  and 
which  he  argues  that  capital  has  been  driven  from  this 
ite  by  taxation?    A.  That  he  will  drive  it  from  that  State  and 
will  go  to  Connecticut  or  Virginia.. 
Q.  You  are  not  familiar  with  it?    A.  No,  sir;  I  think  the  whole 

stion  should  be  evaded  by  having  a  franchise  tax  on  all  cor- 

itions  doing  business  in  this  State,  deriving  their  protection 
>m  the  State;  I  think  it  is  very  unjust  that  foreign  corpora- 


4:54 

tions  should  have  the  same  protection  as  a  local  one;  if  they 
choose  to  adopt  that  method  of  incorporation  in  other  States,  they 
should  be  required  to  have  their  franchises  taxed  in  this  State.1 
which  would  greatly  increase  our  revenues  and  bring  an  immense!1 
revenue  to  the  State. 

By  Mr.  Hamilton. 

Q.  In  the  paper  which  you  read  you  speak  of  the  succession  tax; 
are  you  in  favor  of  what  is  known  as  the  graded  succession  tax 
recommended  by  Comptroller  Campbell?  A.  No,  sir;  I  think  the 
tax  as  it  is  at  present  will  prove  a  great  source  of  revenue  to  the 
State,  and  I  think  if  the  tax  is  increased  it  will  as  this  personal 
tax  is  done  be  a  tax  that  will  be  difficult  to  collect,  and  it  will  be 
the  cause  of  attempting  to  evade  the  tax;  the  tax  is  now  collected;; 
it  is  a  tax  that  is  collected  by  personal  effort. 

By  the  Chairman. 

Q.  Do  you  think  that  the  present  rate,  five  per  cent  on  collatenw 
inheritances,  is  too  high?  A.  No,  sir;  I  think  that  the  five  per  cent 
on  collateral  inheritance  is  a  just  tax,  becomes  a  man  comes  • 
comparative  stranger. 

Q.  What  have  you  to  say  as  to  the  rate  of  one  per  cent  on  direct 
inheritance?  A.  It  is  not  so  much,  I  suppose,  considered  by  the 
State  a  tax  as  it  is  a  tribute  to  the  State  for  the  distribution  op 
the  money,  and  the  only  objection  I  have  to  it  is  that  there  should 
be  no  exemptions  from  it. 

Q.  Would  you  say  that  the  rate  was  high  enough?    A,  I  think  so. 

Q.  You  do  not  think  that  it  is  too  high?     A.  No,  sir;  I  think  ! 
it  is  a  fair  tax ;  it  is  a  slight  compensation  to  the  State  for  prop- 
erty or  money  that  has  evaded  taxation ;  it  is  not  excessive. 

Q.  The  State  Comptroller  recommends,  as  the  counsel  has  sug- 
gested, the  grading  or,  in  other  words,  the  exempting  of  certain 
amounts,  and  then  the  fixing  of  the  rate  on  other  amounts  in 
proportion  to  the  size?  A.  The  laws  have  been  changed  so  fre- 
quently that  our  law  now  is  almost  a  perfect  law,  and,  I  think,  it 
would  be  unwise  to  change  it  just  at  present;  I  think  I  would  giv€ 
the  present  law  a  chance  and  see  how  the  income  comes  to  the 
State. 


Q.  Do  you  think  that  an  inheritance  over  $10,000  ought  to  pay 
the  same  rate  without  regard  to  the  amount  it  may  be  above  that. 
A.  Yes,  sir. 

Q.  Suppose  the  inheritance  was  f  10,000,000,  do  you  think  the 
rate  should  be  the  same?  A.  I  don't  think  it  should  make  any 
difference. 

By  Mr.  Hamilton. 

Q.  What  is  known  as  the  bonded  indebtedness  of  corporations 
would  you  extend  that  to  the  taxation  of  the  bonded  indebtedness 
or  municipal  corporations?  A.  I  don't  think  so;  municipal  cor- 
porations should  be  entirely  exempt  from  State  taxation;  the  State 
should  derive  its  income  direct  from  corporations. 

Q.  You  exclude  municipal  corporations  and  their  indebtedness? 
A.  Yes,  sir. 

By  Mr.  Malby. 

Q.  By  taxing  the  corporations  which  you  have  named  here, 
would  it,  in  your  judgment,  reach  nearly  all  the  personal  property 
in  that  way,  or  a  large  percentage  of  it?  A.  I  think  it  would. 

Q.  So  that  personal  property  would  in  that  way  be  paying 
quite  a  proportion  of  the  State  taxes?  A.  I  want  to  say  before 
leaving  that  I  am  in  great  sympathy  with  the  agricultural  dis- 
tricts, and  I  think  that  the  large  municipalities  should  bear  a 
great  amount  of  tax,  as  they  do,  and  I  think  by  separating  tlie 
State  from  county  taxes  you  will  effect  that  and  there  will  be  no 
longer  this  difference  of  opinion  between  the  counties,  and  you 
can  see  the  thing  is  so  immensely  unjust;  we  ought  to  have  almost 
the  whole  personal  property  of  the  State,  whereas  we  have  a  large 
part  of  the  real  estate  value  and  hardly  any  personal. 

Q.  The  bulk  of  the  testimony  shows  that  the  burdens  in  the 
agricultural  districts  are  largely  of  a  local  character;  how  do 
you  think  AVG  can  remedy  the  local  burdens  of  taxation  in  the  agri- 
cultural districts?  A.  That  is  a  subject  that  I  have  not  studied. 

Q.  The  committee  have  ascertained  upon  examination  where 
fanners  were  present  as  witnesses,  the  extent  of  their  contributions 


456 

toward  the  State  government,  and  they  have  invariably  turn* 
out  to  be  very  light,  showing  that  the  burden  of  taxation  of  th( 
farmer  is  largely  of  a  local  character?  A.  I  would  not  attempt 
to  discuss  local  taxes  in  agricultural  districts. 

Q.  The  difficulty  is  that  while  the  general  sense  seems  to  be 
in  favor  of  relieving  the  agricultural  districts,  that  where  the  bur- 
dens are  ofx  a  local  character  it  becomes  more  difficult  to  devii 
a  scheme  for  a  relief  as  you  can  see?  A.  Yes,  sir. 

By  Mr.  Ainsworth. 

Q.  If  you  raised  the  State  revenues  by  a  tax  upon  corporation* 
and  then  granted  local  option  to  the  localities  as  to  wfiether 
would  tax  personal  property  or  not,  have  you  not  given  an; 
thought  as  to  whether  the  stock  or  bonds  of  corporations  whi< 
are  taxed  for  State  purposes  should  be  exempt  if  a  locality  shoulc 
decide  to  tax  personal  property?  A.  That  is,  so  far  as  the  cor- 
poration or  the  company  trades  in  that  locality;  in  that  county 
each  county  should  have  the  right  to  tax  the  bonded  indebted™ 
and  the  stock  pro  rata  to  the  amount  of  business  operated  in  thl 
county. 

Q.  But  many  corporations  have  their  home  offices  in  counti* 
entirely  different  from  that  where  they  do  any  business;  foi 
instance,  a  stoauier  company  on  Lake  Erie,  whose  business 
done  at  Buffalo,  has  its  home  office  on  the  Hudson  river  here?  A. 
They  do  their  business  in  that  county,  though:  it  does  not  inak( 
any  difference  where  the  office  is. 

Q.  Fndor  existing  laws  they  would  be  taxed  at  the  place  whei 
the  homo  office  is?  A.  That  is  not  just;  they  should  be  taxed  ii 
the  county  whore  thoy  do  business;  if  they  do  business  in  Eri< 
and  havo  tlioiv  offioo  in  Now  York,  why  should  they  not  p.iy  theii 
tax  in  Erie? 

Q.  Would  a  company  that  is  taxed  for  the  maintenance  of 
State,  and  if  Now  York  county  should  decide  to  tax  person? 
as  well  as  real  property,  should  the  bondholders  or  stockholders  oi 
the  corporation  which  has  boon  taxed  pay  their  proportion9 


457 

sir ;  there  should  be  no  double  taxation ;  every  corporation 
bays  to  the  State  and  that  is  always  deducted  in  the  Bounty 
Itaxes. 

Q.  Would  not  that  as  a  result  deprive  the  localities  of  the 
taxes  which  they  should  derive  from  personal  property,  if  they 
tould  decide  to  tax  personal  property?    A.  If  the  county  r.nd 
ite  taxes  were  separated  the  counties  then  would  make  their 
laws  for  the  protection  of  their  own  counties,  and  would 
ike   their   taxes   upon   corporations   doing    business   in   their 
mnties;  they  would  have  the  right  to  make  their  own  local  laws. 
Q.  If  they  should  make  a  law  which  would  decide  to  tax  per 
mal  property,  then  a  stockholder  of  a  New  York  corporation 
it  has  once  been  taxed  for  State  purposes  would  then  be  taxed 
local  purposes?    A.  No,  sir;  we  have  that  same  question  here, 
rat  the  State  tax  is  deducted;  it  is  deducted  from  their  local  taxes 
tere  they  pay  to  the  State. 
Q.  Has  it  ever  been  suggested  to  you  that  the  present  tax  on 
iccession,  what  is  known  as  the  succession  tax,  has  a  tendency 
concentrate  wealth  in  families,   because   the   owner  of  the 
>perty  prefers  to  leave  it  to  his  children  directly  where  it  %\ill 
but  one  per  cent  tax  rather  than  to  distribute  it  generally 
tere  it  will  have  to  contribute  a  share  of  five  per  cent  under  the 
of  1892?    A.  I  think  that  is  very  remarkable;  I  have  never 
it  presented  that  way. 
Q.  The  question  has  been  suggested  by  a  gentleman  present? 
I  think  when  a  person  wants  to  make  a  gift,  whether  it  pays 
re  per  cent  or  one  per  cent  after  he  dies,  it  does  not  make  much 
ference  to  him. 

By  the  Chairman. 

Q.  Do  you  think  that  the  natural  tendency  ought  to  be  to  keep 
money  within  his  family?     A.  Yes;  I  can  not  see  anything  in 
it  argument. 

|Q.  You  hardly  think  a  man  would  disinherit  anyone  to  save 
per  cent?    A.  Hardly;  no,  sir. 
58 


458 

Abram  B.  Tappen,  called  as  a  witness,  being  duly  sworn,  testified 
as  follows: 

By  Mr.  Hamilton. 

Q.  Where  do  you  reside?  A.  New  York  city;  since  the  annexa- 
tion of  lower  Westchester  to  New  York  I  have  been  a  New  Yorker. 

Q.  You  have  been  judge  of  the  Supreme  Court?    A.  Yes  sir. 

Q.  For  how  many  years?    A.  One  term. 

Q.  Have  you  investigated  and  examined  into  the  question  of 
what  is  known  as  the  succession  law  of  this  State?  A.  I  have! 
thought  of  the  subject  for  many  years  before  it  was  adopted. 

Q.  You  have  some  views  to  present  to  the  committee  on  than- 
question,  I  understand?  A.  I  have  always  been  in  favor  of  an' 
inheritance  or  succession  tax  after  learning  of  its  success  in  oud 
State. 

Q.  What  have  you  to  say  as  to  the  present   law;  any  sugges- 
tions in  regard  to  its  modification?     A.  I  think  that  collateral  and 
direct^  both  real  and  personal,  should  contribute  a  certain  sum  of? 
money  upon  the  demise  of  the  owner  to  the  State  treasury;  as  ouci 
probate  and  surrogates  courts  are  now  organized  they  are  sup- 
ported entirely  by  taxation  in  the  several  counties  in  which  they.' 
are  located;  an  estate  to  be  administered  whether  under  a  will 
or  in  case  of  intestacy  goes  through  the  surrogate's  court  ;  ii   con- 
tributes nothing  in  the  way  of  fees  or  charges  in  any  respect  to 
the  support  of  the  tribunal  which  had  to  pass  upon  its  settlement ; 
some  time  ago  1  had  an  estimate  made  in  the  Xe\\    York  MUT« 
gate's  court  of  the  number  of  letters  testamentary,  letters  cl 
administration,  letters  of  guardianship,   annually  issuing  out  of 
that  court;  the  number  was  in  the  neighborhood  of  5,000;  many 
of  those  estates  amounted  to  hundreds  of  thousands  of  dollars; 
twenty  years  ago  or  more,  a  fee  of  five  dollars  was  attached  to  any 
issue  of  any  letters  where  the  estate  was  over  $100  or  $500,  and 
that  was  abolished  by  subsequent  legislation,  and  uo  fee  reserved 
to  those  courts;  I  estimate  that  one-half  of  those  5,000  lett€J» 
issued  in  the  New  York  probate  court  could  pay  a  fVe  of  fi 
five  hundred  dollars,  simply  for  the  grant  of  letters  alone,  which 
should  go  into  the  county  treasury,  anil  which  would  form  a  vewj 


459 

considerable  fund  for  the  support  of  the  court  itself;  that  rule 
should  be  applied  in  every  coimty  of  the  State;  now,  coming  to 
the  succession  tax,  I  communicated  my  views  several  years  a$o 
when  Mr.  Edward  Donnelly  was  one  of  the  commissioners  of  taxes 
in  Xew  York  city,  an  intelligent, '  retired  merchant,  and  I  could 
not  persuade  him  as  to  the  tax;  he  says  it  would  be  a  tax  on  the 
dead;  I  said:  "You  can  not  tax  the  dead;  that  would  be  beyond 
all  human  control;  the  tax  would  go  on  the  estates  which  the 
living  were  inheriting;"  and  it  is  the  only  \vay  gentlemen,  by  a 
direct  and  collateral  inheritance  tax  that  you  can  reach  personal 
••estate;  there  is  no  doubt  of  that;  when  I  see  the  estate  of  Mr. 
Astor  passing  from  him  *to  an  only  child,  which  the  newspapers 
value  at  $100,000,000  —  I  don't  know  what  the  real  value  would 
be  —  I  say  he  should  pay  five  per  cent  to  the  common  treasury; 
that  rule  should  apply  to  every  county  in  the  State,  and  to  every 
estate  over  $10,000  in  value;  you  might  exempt  that,  or  you  might 
exempt  $10,000  in  behalf  of  each  of  the  children,  or  something  like 
that ;  one  of  the  chief  weak  features  is  it  exempts  so  much  in  the 
way  of  charitable,  literary,  benevolent  and  other  institutions;  1 
say  to  you  that  there  are  institutions  in  this  State  receiving  hun- 
dreds of  thousands  of  dollars  in  bequests  which  are  exempt  from 
I  this  tax;  can  you  tell  me  why  those  institutions  should  enjoy  all 
the  benefits  of  the  laws  and  the  features  which  civilization 
brings  —  should  be  totally  exempt  from  contributing  some  small 
I  sum  of  money  when  receiving  a  large  gift. 

By  Mr.  Guenther. 

Q.  They  are  exempt  to  the  extent  of  $3,000,000?  A.  It  is 
I  very  large;  now,  that  applies  to  the  inheritance  tax;  it  is  one 
per  cent  on  direct  inheritance  and  five  per  cent  on  collateral 
[inheritance;  I  recollect  in  the  Legislature  reading  some  of  its 
debates;  one  of  the  members  said:  "If  we  enforce  a  law  of  that 
character  the  State  will  receive  money  than  it  needs  for  its 
annual  expenditure,"  and  that  seemed  to  strike  him  as  one  of  the 
worst  objections  to  a  law  of  that  character;  well,  gentlemen,  my 
own  judgment  is  that  when  the  State  receives  more  than  it  needs, 
it  can  very  easily  and  very  properly  restore  to  the  county  the 


460 

surplus  which  each  had  contributed  to  make  up  the  sum  total, 
and  in  that  way  the  counties  will  be  relieved  from  their  expendi- 
tures; several  years  ago  I  made  up  a  statement  to  show  the 
amount  of  money  in  the  tax  levy  paid  by  New  York  city  to  the 
State  Treasurer  for  a  period  of 'ten  years,  and  during  that  period 
it  was  $70,000.000;  the  difficulty  with  our  State  organization 
is  that  it  has  now  to  go  into  every  county  in  this  State,  and 
each  of  those  counties  has  to  go  to  every  township  for  the  pur- 
pose of  receiving  contributions  for  the  support  of  the  State;  th< 
State  should  have  on  independent  source  of  revenue  of  its  owi 
it  should  leave  every  county  out,  unless  it  is  necessary  to  colle< 
something  to  make  up  a  deficiency;  but  tiie  wisdom  of  the  presei 
Legislature  will  be  best  shown  by  devising  a  scheme  of  incoi 
which  will  relieve  it  from  going  to  the  sixty  counties,  and  tuos 
counties  going  to  1,200  townships;  now,  in  respect  to  persoi 
taxation,  I  will  illustrate  to  you  by  the  township  of  Youiwri 
where  I  did  live  and  where  I  have  taxable  property  —  four  towi 
ships  embraced  in  the  city  of  Yonkers;  the  result  of  the 
sonal  assessment  law,  as  now  sought  to  be  enforced,  is  that 
doivt  get  the  money;  a  man  worth  $5,000,000  of  personalty  wi 
compromise  for  $500,000,  as  was  the  case  with  the  late  Mr. 
Gould;  I  recollect  when  the  assessment  of  the  Vanderbilt  estat 
came  before  the  commissioner  of  taxes  and  assessments  several 
years  ago,  the  trustees  said:  "We  will  compromise  with  \on:" 
the  trustees  came  before  them  and  said:  "If  you  insist  upon 
that  amount  $15,000,000  or  $20,000,000,  we  shall  certainly  remove 
the  location  of  this  estate  to  Long  Island,  Suffolk  county  or  Queens 
county,  but  if  you  will  accept  a  valuation  at  the  hands  of  the 
trustees  of  one-third  of  the  amount  which  the  tax  commissioners 
thought  it  ought  to  be  fixed  at  we  will  pay  it;"  I  find  that  the 
real  estate  of  the  city  of  Yonkers,  for  the  year  1891,  is  valued  at 
f  2 1,000,000;  the  values  are  up  pretty  well,  and  they  contribute 
a  fair  share  to  county  and  State  government;  Yoiikers  is  high 
as  to  valuations  in  real  estate;  the  personal  estate  amounts  to 
three  per  cent  of  that  valuation  of  real  estate  —  the  wealthy 
oity  of  Yonkers,  having  some  of  the  largest  owners  of  personal 
property  in  the  State  among  its  residents,  returns  personal  taxa- 


461 


tion,  for  the  joar  1891,  at  $600,000,  less  than  throe  per  cent  of 
the  valuation  of  its  realty;  now,  there  is  in  the  city  of  Yonkers 
undoubtedly  half  as  much  personal  estate  in  value  as  there  is 
of  realty,  and  if  the  realty  is  $24,000,000,  there  is  $12,000,000  in 
that  city  personal  estate,  producing  income  escaping  taxation; 
it  is  no  use  to  talk  about  listing  law  or  anything  of  that  kind; 
it  is  simply  an  inducement  to  perjury;  a  man  without  a  con- 
science will  escape  taxation;  T  would  be  glad  to  see  the  law  MS 
to  personal  tax  thoroughly  enforced;  Governor  Hill  said  personal 
property  must  be  taxed;  I  agree  with  him,  and  everybody  else, 
if  you  can  reach  it;  but  the  consequence  of  the  present  law  is  that 
the  honest  pay  and  all  others  escape. 

r»y  the  Chairman. 

Q.  Then,  the  proportion  of  the  honest  to  the  jjreat  whole  is 
very  small?    A.  They  don't  go  up  and  swear  it  off;  it  was  so 
during  the  war  with  the  income  tax;  a  man  that  had  $100,000 
a  year  would  swear  it  down  to  nothing;  it  is  a  war  tax,  like  the 
fax  on  the  conveyances  of  property;  it  was  essential  to  the  sup- 
port of  i he  government  during  the  war;  as  to  this  question  of 
[collateral  and  direct  inheritance,  I  remember  sett1  ing  an  estate 
the  surrogate's  court  of  Westchester  for  $70,000,  which  went  to 
|the  testator's  widow  and  children,  and  the  government  tax  of  one 
cent  was  cheerfully  paid,  amounting  to  $700  without  demurrer 
the  collector  of  the  government  revenue,  John    Mason;    you 
ee  how  easily  this  can  be  collected  if  we  once  adopt  a  proper 
law;  tut  of  all  things  strike  out  this  terrible  exemption  feature; 
recollect  reading  in  some  history  of  English  literary  people  an 
lote  touching  Charles  Lamb;  he  collected  a  legacy  of  thirty 
for  his  sister,  who  was  in  an  asylum;  the  government  tax 
ten  per  cent  was  exacted  on  that  thirty  pounds;  three  pounds 
had  to  pay  to  the  government;  I  don't  advocate  that;  that  is 
ig  too  far,  but  I  do  say  that  all  estates  on  the  death  of  the 
rner,  without  any  reduction,  except  in  the  case  of  the  widow 
md  children,  should  be  assessed,  and  the  revenue  should  go  to 
State  and  the  counties  would  feel  a  wonderful  amount  of 
tent;  this  State  Board  of  Equalization  could  be  wiped  out; 


462 

every  board  of  supervisors  has  a  committee  on  equalization, 
which  they  take  so  much  for  the  town  of  White  Plains  and  pi 
it  into  the  town  of  Bedford;  there  is  too  much  exemption 
property  of  all  kinds  throughout  this  State  in  this  inherita] 
law;  real  estate  I  am  talking  about  now,  and  no  one  knows  bett< 
than  Commissioner  Coleman  who  made  up  a  table;  he  said  th( 
were  200,000,000  that  escaped  in  this  State. 

By  the  Chairman. 

Q.  What  would  you  say  about  limiting  the  amount  of  chui 
property,  for  instance,  that  ought  to  be  exempted?    A.  It  ougl 
to   be;   I   would  not  give   any   educational  institution  with 
income  of  $20,000  any  exemption  whatever;  let  it  pay  taxes 
anybody  else  would. 

Q.  All  church  property  is  exempted;  now,  what  do  you 
about  fixing  a  limit?    A.  There  must  be  a  limit. 

By  Mr.  Gruenther.  }| 

Q.  Do  you  refer  to  chapter  553  of  the  Laws  of  1890  as  to  exemp- 
tion? A.  It  is  the  law  of  1892;  I  am  in  favor  of  the  State  obtain- 
ing a  revenue  by  its  own  mode  of  taxation,  which  would  relieve 
it  from  going  into  the  sixty  counties. 

By  the  Chairman. 

Q.  Outside  of  the  question  of  exemption,  the  present  law  con- 
templates the  assessment  of  all  personal  property;  judging  from 
your  experience  with  the  taxation  of  personal  property  what  do 
you  say  of  the  wisdom  of  continuing  to  tax  personal  property  at 
all?  A.  The  effect  of  the  present  system  is  that  personal  pvop- 
erty  escapes  in  a  large  measure,  and  only  the  honest  few  iind 
themselves  obliged  to  pay. 

Q.  What  do  .you  say  as  to  the  wisdom  of  continuing  to  tax  it 
at  all?  A.  I  think  I  would  allow  every  county  to  determine  for 
itself  whether  it  would  have  personal  property  added  10  the  tax- 
rolls  or  not. 

Q.  Then  you  are  in  favor  of  separating  State  and  county  taxes 
and  allowing  local  option  largely  through  the  counties?  A.  I 


408 

thiuk  it  would  be  wist1  to  try  it  for  a  time;  we  could  iry  it  to  a 
limited  extent;  now,  another  suggestion  has  been  made  that 
when  we  put  personal  property  on  the  tax-roll  you  can  by  legisla- 
tion say  that  wThere  the  amount  is  reported  by  the  owner,  or  any 
v%ay  you  like  to  get  an  honest  return,  the  tax  thereon  should  be 
only  one-half  the  tax  on  real  estate;  that  would  have  a  tendency 
to  bring  out  a  great  many  million  dollars  by  people  that  don't 
want  to  pay  a  large  per  cent;  for  this  reason  mortgages  are  live 
per  cent;  the  taxes  are  two  per  cent;  if  a  man  has  $25,000  in 
mortgages  and  has  to  pay  one  per  cent  or  one  and  a  half  per  cent 
in  tax  he  can  not  afford  to  pay  it;  no  one  can;  there  is  a  popular 
feeling  on  tliis  subject  which  controls  assessors  and  lawmakers 
and  all  people  charged  with  the  administration  of  the  law,  and 
the  feeling  is  that  you  can  not  reach  it, 

By  Mr.  Ainsworth. 

Q.  The  idea  in  the  agricultural  districts  is  that  if  all  that 
property  was  taxed  the  rate  would  be  very  much  lower?  A.  I 
agree  that  all  property  should  be  taxed  if  you  can  reach  it,  but  it 
is  impossible;  nowr,  a  large  amount  of  the  personal  property  — 
I  am  not  familiar  with  the  workings  of  the  tax  commission  here 
in  New7  York,  but  I  do  know  tliis  —  an  estate  of  land  was  con- 
verted by  the  executors  into  personalty  by  a  sale  to  the  amount 
of  |200,000;  they  rendered  their  account  to  the  probate  court 
showing  that  sum  of  personal  estate  and  declaring  the  executors 
who  held  it  under  the  provisions  of  the  will;  the  assessors  have 
the  right  to  go  to  the  probate  court  and  to  the  register's  office  and 
any  other  place,  and  the  result  is  that  this  estate  of  $200,000  was 
put  down  on  the  assessment-roll,  and  in  that  way  the  assessment- 
roll  of  this  city  has  been  increased  while  the  living  owners  have 
had  quite  a  time  to  keep  it  out  of  the  tax-roll. 

Q.  You  justify  the  levying  of  a  tax  upon  direct  and  collateral 
inheritances  upon  the  theory  that  the  counties  are  put  to  an 
expense  in  administering  the  estate?  A.  Yes,  sir. 

Q.  If  you  justify  it  upon  that  ground,  in  order  to  be  logical,  why 
ought  not  those  taxes  go  to  the  localities  that  are  at  the  expense 
of  maintaining  the  court?  A.  I  should  not  have  any  objection 


464 

to  their  going  to  every  county  in  which  the  tax  is  collected,  but 
the  State  ought  to  have  some  independent  source  of  revenue  which, 
would  keep  it  out  of  those  counties  every  year. 

Q.  Then  you  justify  the  tax  on  the  needs  of  the  State  rather  than 
the  expense  to  the  localities?  A.  Out  of  justice  to  all  the  coun- 
ties; it  is  very  disproportionate  in  some  counties  compared  with 
others. 

Q.  Some  States  have  a  listing  law,  Ohio,  for  instance;  have  you 
ever  examined  the  question  as  to  how  much  property  was  added 
to  the  rolls  by  that  law?  A.  They  have  it  in  Connecticut  too; 
the  assessor  comes  along  and  hands  a  printed  list  to  the  persons: 
who  have  to  answer  them,  and  according  to  that  person's  con-j 
science  he  may  expose  his  poverty  or  his  richness;  it  is  an  inquisi- 
torial law,  and  as  I  said  before,  about  the  government  income] 
tax  during  the  war,  it  is  largely  evaded. 

Q.  Have  you  ever  examined  the  question  as  to  how  much  it 
added  to  the  rolls?  A.  No,  sir;  I  have  not  gone  into  that  in  other 
States. 

Q.  So  that  it  is  a  matter  of  opinion  as  to  whether  it  works  in. 
those  States  rather  than  a  matter  of  knowledge?  A.  I  don't! 
favor  the  assessor  going  to  every  person  and  saying:  "I  want  youj 
to  swear  how  much  you  are  worth;"  I  think  you  can  do  justice| 
to  the  taxpayers  and  to  the  public  treasury  without  going  into 
that  system. 

By  the  Chairman. 

Q.  Your  theory  is  that  the  county  would  be  compensated  for 
maintaining  the  probate  court  by  a  tax  upon  a  granting  of  the 
letters?  A.  Yes,  sir. 

Q.  And  that  the  other  would  be  a  contribution  to  the  State 
treasury?    A.  Yes*  sir;  that  is  my  idea;  I  would  have  a  little  sys- 
tem of  fees  for  the  benefit  of  the  county  treasurer,  which  would 4 
certainly  pay  all  the  expenses  of  the  court. 

By  Mr.  Malby. 

Q.  Do  you  agree  with  Comptroller  Meyers  with  reference 
increasing  the  tax  on  corporations,  and  so  forth?    A.  I  have  nc 


465 

given  any  attention  to  the  subject  of  corporation  taxes,  although 
I  admire  the  wisdom  of  the  law  that  provides  an  income  to  the 
State. 

By  the  Chairman. 

Q.  I  should  like  to  get  your  opinion  as  to  whether  you  favor 
jthe  taxation  of  personal  property  at  all,  or  whether  you  think 
all  the  revenues  ought  to  be  derived  from  real  estate  and  from  cor- 
porations? A.  Well,  personal  estate  is  in  New  York  city 
||243,000,000,  that  is  on  the  tax-rolls;  I  compare  that  with  the 
ssessment  of  real  estate  .and  I  find  it  to  be  sixteen  per  cent ;  I 
mid  scarcely  favor  the  striking  of  that  off;  I  should  feel  reluctant 
to  say  that  it  should  be  stricken  from  the  rolls. 

By  Mr.  Hamilton. 

Q.  Under  the  present  inheritance  tax  law  real  estate  passing 
the  direct  descendants  is  held  exempt;  would  you  favor  the 
mtinuance  of  that  exemption,?    A.  I  would  not  favor  any  exemp- 
Lor,  I  should   impose  a  very  moderate  tax  upon  real  estate, 
cause  that  has  contributed  its  share  of  taxation  every  year; 
m  the  succession  tax  I  should  favor  its,  being  taxed  and  not 
[xempted  —  real  estate  as  well  as  personal ;  when  you  say  that  the 
bate  may  receive  f  10,000,000  a  year  when  it  only  wants  5,000,000 
it  is  an  argument  in  favor  of  this  tax,  because  that  excess  can 
returned  to  the  different  counties  in  the  proportion  which  they 
mtribute. 

Q.  That  excess  could  well  be  applied  to  the  education  fund  of 
State?  A.  It  could  be  applied  to  the  different  counties  to 
general  reduction  of  taxation. 
Q.  At  what  rate  do  you  believe  real  estate  passing  to  the  direct 
jcendants  should  be  taxed?  A.  One  per  cent  is  enough,  but  you 
>uld  devise  some  simpler  form;  you  want  a  much  more  simpli- 
form,  and  it  is  easily  done  by  anyone  who  is  familiar  with  the 
ting  of  laws  and  questions  of  evidence. 

By  Mr.  Ainsworth. 

[Q.  How  large  a  proportion  of  the  transactions  in  the  exchanges 
New  York  do  you  think  represent  actual  transfers  intended  to 
followed  by  delivery?  A.  In  trade  and  commerce  generally? 

59 


Q.  On  the  exchanges,  produce  and  stock  and  oil?    A.  I  shoul 
say  seventy  per  cent  of  them  were  speculative  or  marginal. 

Q.  When  those  are  speculative  to  so  large  an  extent,  would 
not  be  as  equitable  to  make  a  tax  upon  those  as  upon  inheritan< 
A.  I  think  that  law  would  have  more  tendency  to  restrict  trade 
I  don't  believe  that  the  government  cares  to  go  into  that;  I  wi 
tell  you  why;  I  have  no  very  close  knowledge  of  this  question,  bi 
it  would  show  that  the  speculation  in  grain  in  Chicago  put  th< 
prices  of  grain  up,  and  it  has  benefited  the  farmers  who  have  ha< 
the  grain;  I  don't  believe  you  ought  to  tax  any  of  those. 

Q.  Would  that  be  any  more  restraint  on  trade  than  a 
upon  corporations?  A.  A  tax  upon  a  legitimate  value  is  vei 
different  from  a  tax  on  a  stated  transaction;  I  buy  wheat  at  01 
dollar  a  bushel,  and  I  don't  take  it;  if  it  comes  up  to  one  dolls 
and  five  cents  I  pay  the  difference. 

Q.  The  ownership  may  be  only  for  a  day?    A.  Yes,  sir. 

Q.  If  it  is  a  shady  transaction  how  is  that  a  restraint:  on 
trade?    A.  If  they  had  to  pay  this  tax  they  would  stop  speci 
tion;  I  buy  100  barrels  of  sugar  and  contract  for  it  for  futu] 
delivery;  I  buy  it  and  take  it;  are  you  going  to  tax  that? 

Q.  No?     A.  Why  not? 

Q.  Because  that  is  an  actual  transaction  and  the  other  is  no1 
A.  If  I  don't  want  to  take  it  I  will  pay  the  man  the  difference  ai 
I  will  be  the  loser. 

Q.  One  is  an  actual  transaction  in  the  necessities  of  life  a 
the  other  is  gambling?    A.  How  are  you  going  to  follow  tl 
difference  between  the  two? 

Q.  By  the  question  of  delivery?  A.  Who  is  going  to  do  il 
That  law  would  be  a  failure  and  not  only  a  failure,  but  it  woul 
throw  a  cloud  upon  the  success  of  some  other  forms  of  taxati< 
which  we  all  approve  of;  if  people  want  to  go  down  on 
exchange  and  bet  with  each  other  that  stocks  will  reach 
certain  price,  and  they  don't  reach  the  price,  let  them  go  ahead. 

By  the  Chairman. 

Q.  Wouldn't  the  tendency  be  to  drive  exchanges  out  of  New 
York   altogether?    A.  Yes;   talk   about   putting   one   on   cotton 


467 

and  they  would  move  the  market  to  Liverpool;  Liverpool  is  as 
[great  center  as  New  York  is. 

Q.  It  would  be  very  unfortunate  to  drive  those  exchanges  out? 
| A.  Let  me  explain  to  you;  I  read  that  some  two  or  three  hundred 
'•ears  ago  that  some  of  the  countries  in  Europe  it  was  deemed 
>est  to  raise  the  revenues  of  the  government  by  putting  a  one  per 
jent'tax  on  all  sales,  both  retail  and  wholesale;  now,  then,  the  pro- 
lucer  sells  to  the  storekeeper;  he  was  taxed;  the  wholesale  dealer 
)ld  to  the  retail  dealer  and  he  was  taxed  one  per  cent,  and  when 
the  retail  dealer  distributed  the  article  among  the  consumers  he 
to  pay  his  one  per  cent,  and  the  whole  thing  resulted  in  bank- 
iptcy ;  you  can  not  tax  everybody  and  everything. 
Q.  In  that  case  the  consumer  paid  all  the  tax  really?  A.  That 
is  what  it  came  to;  the  consumer  was  taxed  three  per  cent. 
Q.  The  small  men  paid  all  the  tax?  A.  Yes,  sir. 

By  Mr.  Ainsworth. 

Q.  That  would  not  apply  to  exempting  everthing  that  showed 
ictual  delivery?  A.  I  do  not  want  to  tax  the  current  trade  and 
ie  business  of  the  country,  whether  it  be  speculative  or  mer- 
cantile; transactions  are  the  same  and  to  some  extent  speculative; 
buy  a  cargo  of  tea  in  China,  and  you  don't  know  when  it 
>mes  here  how  the  market  is;  you  might  have  to  hold  your  tea 
id  sell  it  at  a  loss;  leave  those  transactions  alone  and  then  you 
in  get  revenue  from  other  sources  to  meet  all  the  expenses  of 
ie  government. 

Q.  I(;  seems  to  be  that  it  is  illogical  if  you  are  going  to  exempt 
>rsonal  property  from  taxation  and  then  tax  a  direct  inheritance 
jausc  it  has  escaped  taxation?    A.  An  inheritance  is  a  gift; 
rtthin  common  law  no  man  could  make  a  will:  tlm  power  to 
kfl  a  will  and  dispose  of  estate  after  death  is  a  purely  statu- 
|:ory  power  to  give  certain  people  certain  property;  now,  why 
should  not  the  recipient  contribute  something  out  of  property 
'hich  he  has  not  earned  and  which  he  may  not  be  in  need 
>f  for  the  general  welfare. 

Q.  Do  you  base  it  upon  that  ground  or  do  you  base  it  upon  the 
jround  that  the  property  has  escaped  taxation  while  in  the 


408 

hands  of  the  owner;  I  don't  think  it  is  logical?  A.  I  have  said 
at  the  beginning,  I  want  the  State  treasury  to  be  filled  from 
othor  sources  so  that  it  need  not  come  here  to  this  city  for  six 
or  seven  miliion  dollars  every  year  and  go  to  other  counties  every 
year. 

By  Mr.  Malby. 

Q.  Would  you  increase  the  percentage  as  the  estate  increased? 
A.  I  would  make  it  reasonably  moderate  so  that  it  could  be 
surely  collected;  if  you  make  it  unreasonably  there  will  be  some 
mode  of  escaping  or  evading  it;  I  would  exempt  estates  of 
$10,000  for  the  benefit  of  widows  and  children  only;  the  personjjl 
estate  in  New  York  city  on  the  tax-roll  at  two  per  cent  or  less 
will  produce  about  the  sum  contributed  by  the  city  to  the  State 
treasury,  and  so  long  as  the  State  needs  five  or  six-  millions  from 
the  city  every  year  it  will  not  do  to  exempt  personal  estate;  New 
York  and  other  counties,  when  authorized  by  law.  can  dispense 
with  personal  taxes  when  the  State,  from  the  other  sources  I 
have  indicated,  obtains  a  sufficient  amount  for  State  purposes. 

Edgar  J.  Levy,  called  as  a  witness,  being  duly  sworn,  testified 
as  follows: 

By  Mr.  Hamilton. 

Q.  You  are  ir  the  comptroller's  office  of  the  city  of  New  York/ 
A.  Yes,  sir. 

Q.  And  you  have  charge  of  the  department  for  the  collection 
of  the  collateral  inheritance  tax?  A.  I  have. 

Q.  You  are  familiar  with  the  operation  of  the  law?  A.  Ye» 
sir. 

Q.  Have  you  any  suggestion  to  make  to  the  committee  as  tc 
its  operation  or  as  to  any  of  these  amendments?  A.  I  h,'iv< 
heard  the  testimony  of  Judge  Tappen  on  the  point  of  exernptioi 
from  the  act,  I  want  to  indorse  most  heartily  everything  he  hai 
said  and  1  think  perhaps  I  can  show  the  committee  ways  ii 
which  thfi  State  suffers  by  reason  of  the  exemptions  in  additioi 
to  the  amount  it  loses  by  not  collecting  this  tax;  the  second  sac 
tiou  of  the  present  tax  provides  for  a  tax  on  direct  inheritaiiC' 


and  right  at  the  end  of  the  section  there  is  a  sentence:  "But  no 
j;  legacy  heretofore  or  hereafter    given    to  any    person  who  is  a 
&  bishop  or  to  any  religions  corporation  shall  be  subject  to  tax;" 
j|now,  it  is  a  fact  that  in  large  estates  it  is  a  favorite  method 
I  for  testators  to  leave  their  property  to  somebody  for  life,  with 
•the  power  of  disposition  by  will.     In  such  a  case  the  State  can 
tnot  collect  the  tax  when  it  passes  through  the  surrogate's  court, 
•for  the  reason  that  the  executor  n>ay  say:  "This  person  to  whom 
I' the  power  is  given  is  going  to  bequeath  that  property  to  some 
fl  person  who  is  a  bishop,  or  to  a  religious  corporation;"  conse- 
quently, as  regards  that  remainder,  which  may  be  the  principal 
part  of  the  estate,  no  tax  can  be  collected,  and  as  a  practical 
matter  it  probably  won't  be  collected  at  all,  because  the  only 
reason  why  this  tax  is  easily  collected  is  it  goes  through  the 
surrogate's  court,  and  you  can  tell  just  how  much  property  there 
is  there,  but  if  you  are  to  rely  upon  the  honesty  of  the  legatees, 
OTI  are  brought  down  to  exactly  the  same  position  that  you  are 
n  v.  ith  regard  to  the  taxation  of  general  personal  property;  I 
;all  the  attention  of  the  committee  to  the  language  of  the  General 
.Vriii  in  this  department  in  the  matter  of  Wolff,  recently  decided 
n  which  they  call  attention  to  the  provision  in  the  act  as  most 
ncongruous;  they  say  that  evidently  the  Legislature  must  have 
bought  that  a  person  who  was  a  bishop  was  entitled  to  more 
foil  icnsiueration  from  the  testator  than  his  own  children;  that  is 
he  act  of  1892. 

liy  the  Chairman. 

Q.  Who   do  you   say   should  pay  that  tax;  the   man  having 
me    life  estate  or  the  remaindermen?     A.   The  remaindermen 
hould  pay  the  tax  upon  their  own  interests;  under  the  act  of 
885   and   1887  the  statute  evidently   contemplated    taxing   the 
Bjiacies  in  the  hands  of  the  legatees ;  last  year  an  effort  was  made 
[Breach  the  body  of  the  testator's  estate  as  a  whole;  now,  if  it 
'ere  not  for  those  exemptions  you  could  simply  deduct  one  per 
trom  the  net  amount  of  the  decedent's  estate,  and  that  would 
ie  end  of  it;  but  as  soon  as  you  have  to  ascertain  the  amount 
to  each  distributee  you  are  met  with  great  practical  dim- 
les. 


470 


;      Lil.A 

:  was 
:enip 


Q.  Would  you  favor  the  imposition  and  collection  of  the  tax 
without  regard  to  where  the  money  was  going  or  to  whom  it  wn 
given?    A.  If  you  had  no  exemptions  it  would  to  a  very  gi 
extent  make  the  collection  of  the  tax  .simpler. 

Q.  You  would  be  in  favor  of  doing  away  with  all  those  exc 
tions?    A.  Entirely;  I  don't  think  there  is  any  justification  for 

Bolton  Hall,  called  as  a  witness,  being  duly  sworn,  testifi< 
follows : 

By  Mr.  Hamilton. 

Q.  You  reside  in  New  York?    A.  Yes,  sir. 

Q.  What  is  you  business?    A.  I  am  a  lawyer. 

Q.  You  have  given  considerable  attention  to  personal  taxatic 
A.    Yes,  sir. 

Q.  You  are  a  member  of  the  Tax  Reform  Association  of  Nev 
York'?    A.  Yes,  sir. 

Q.  And  secretary  of  that  body?    A.  Yes,  sir. 

Q.  And  are  also  the  author  of  several  literary  productions  up 
the  question?    A.  Yes,  sir;  I  am. 

Q.  Including  the  work  known  by  the  title  of  "Who  pays  yo 
taxes?"    A.  Yes,  sir. 

Q.  Are  you  familiar  with  the  present  laws  with  regard  to  t 
levying,  assessment  and  collection  of  taxes  in  the  State  of 
York?  A.  As  regards  those  upon  real  and  personal  estate,  I  au 
to  the  matter  of  corporations  I  have  not  given  so  much  attentio 

Q.  Are  you  also  familiar  with  the  systems  in  other  State 
A.  Yes.  sir. 

Q.  And  in  regard  to  the  operation  of  the  listing  system? 
Yes,  sir. 

Q.  And  also  the  Massachusetts  plan?    A.  Yes,  sir. 

Q.  And.  the  Pennsylvania  law?    A.  My  information  being  in 
genera!  way. 

Q.  Have  you  anything  to  say  as  to  the  propriety  of  modifyu 
the  present  laws  relating  to  taxation,  assessment  and  interest 
far  as  they  affect  the  agricultural,  manufacturing,  commerci 
laboring,  banking  and  other  interests  of  this  State?    A.  Yes,  s: 
I  think  it  would  be  for  the  prosperity  of  the  county  and  State 
New  York  to  entirely  exempt  personal  property  from  taxatk 


471 

and  to  raise  our  whole  revenue  from  the  value  of  real  estate  and 
from  taxes v upon  the  special  privileges  to  corporations;  our  real 
•  derives  its  value  principally  from  the  presence  of  the  per- 
sona) property  on  and  about  it;  the  world  is  large  and  any  dis- 
crimination that  lie  may  make  of  the  nature  of  a  personal  tax  lias 
a    tendency   to   the  concealing  of  personal  property,  and  to   the 
driving  of  it  away  and  the  driving  of  the  payer  of  it  away  from  the 
State;  were  the  sixteen  per  cent,  or  thereabouts,  now  assessed 
upon  personal  property  in  New  York,  which  includes  assessments 
upon  banks  —  were  that  added  to  the  tax  upon  real  estate  and 
exempt  the  personal  property,  it  would  so  increase  the  value  of 
the  real  estate  that  real  estate  owners  could  well  afford  to  pay 
the  extra  burden  upon  their  real  estate  and,  in  fact,  that  is  the 
sentiment   almost   without  exception  of  the  largest  real  estate 
owners  in  this  city;  in  that  all  the  great  land  holding  estates 
occur;  the  larger  manufacturers  and  merchants  would  advocate 
such  a   thing  and  the  small  shopkeepers  want  the  same  thing; 
verage  citizen  is  willing  to  pay  his  fair  proportion  of  taxes; 
the  reason  that  he  wants  to  evade  is  because  he  knows  that  most 
other  citizens  evade  and  he  knows  that  if  he  does  not  join  in  the 
iniquity  he  will  be  unduly  assessed;  whereas  if  I  pay  so  much  tax 
on  a  positive  basis,  there  are  very  few  who  woidd  not  be  willing 
y :  "  1  will  pay  my  share ; "  the  attempt  in  other  States  to  col- 
-ersonal  taxes  by  listing  bills  has  had  the  effect  of  driving  out 
of  those   States  large  payers  of  taxes  —  those  who  have  large 
i amounts  of  personal  taxes;  I  have  a  client,  for  instance,  who 
|  resided  for  many, years  in  Ohio;  he  fought  the  listing  system  in 
•]  the   courts,   and   when  the  highest  court  in  the   State   decided 
|j  against  him  he  removed  to  New  York  and  he  still  remained  here: 
1;  he  lias  invested  his  money  in  real  estate  and  in  insurance  stocks 
hi  New  York,  and  from  this  of  course  his  investments  tended 
to  raise  the  price  of  real -estate;  upon  those  he  pays  his  taxes; 
he  is  glad  to  pay  them;  I  think  that  represents  the  sentiment  of 
great  mass  of  New  York  business  men,  large  and  small,  as 
well  as  of  New  York  real  estate  owners. 

Q.  Let  me  ask  you  right  there;  where  would  any  advantage  flow 
from  the  exemption  of  personal  property  in  agricultural* commii- 


472 


be 

„ 


nities?  A.  Because  where  we  do  succeed  in  asseessing  persona 
property,  the  farmer's  personal  property  which  can  not  be  co 
cealed,  is  got  to  a  much  larger  proportionate  extent  than  that 
the  merchant  or  the  banker,  and  therefore  it  is  hard  on 
farmer ;  everyone  knows  if  the  farmer  has  saved  a  little  money  anc 
loaned  it  on  a  mortgage  the  assessors  get  that  sure;  if  he  has  an 
expensive  machine  the  assessor  gets  that  sure;  but  the  city  mai 
knows  the  legal  devices — can  pay  for  the  legal  devices  for- evading 
that  sort  of  thing,  and  knows  the  methods  of  moving  his  place  of 
business  or  his  headquarters  or  summer  residence  to  Jersey  or 
Tarrytown  or  Connecticut,  or  wherever  he  thinks  they  would  be 
most  easy  with  him;  the  farmer  is  stuck  right  there,  and 
assessor  hits  him  every  time. 

Q.  In  large  cities  like  New  York  you  justify  your  position  upon 
the  ground  that  it  would  be  a  benefit  to  the  city?    A.  Yes,  sir. 

Q.  But  when  you  come  to  the  agricultural  community  you  do 
not  justify  it  upon  any  such  ground?    A.  I  do;  at  present  it  is  very 
difficult  to  borrow  money  upon  mortgages  at  less  than  from  five 
to  six  per  cent  in  country  places;  I  never  heard  of  one  at  less  than 
that,  and  usually  it  costs  more  than  that,  because  the  mortgages 
are  made  for  a  year  and  there  is  the  expense  for  searching,  com 
minions  and  so  forth;  and  it  will  run  up  to  seven  and  a  half, 
and  at  the  end  of  the  year  there  is  another;  it  is  very  well  for 
lawyers;  why  then  do  they  pay  that?     Because  my  clients  can 
not  loan  in  the  country;  because  they  know  that  the  assessor  ia 
going  to  catch  them;  I  had  a  client  who  wished  to  borrow  $40,000 
at  four  per  cent;  I  had  borrowed  for  another  client  that  amount 
for  one  of  the  companies  here ;  I  went  there  the  other  day  and  said 
to  the  secretary:  "Have  you  got  any  money  to  lend?"     "Yes,  sir; 
we  have  got  about  $40,000  we  would  like  to  put  out;"  I  thought 
I  was  all  right  then;  I  said:  "I  have  got  a  first-class  mortgage 
for  you  at  four  per  cent;"  he  says:  "We  can  not  do  that  now;' 
he  says:  "That  loan  we  made  before,  when  we  came  to  figure 
we  had  to  pay  a  tax,"  I  think  it  was  167  or  something  like  that 
for  that  loan,  and  now  we  must  get  six  per  cent;  if  you  have  t< 
pay  a  high  rate  of  interest  on  the  mortgages  it  decreases  the  valu 
of  your  peal  estate  as  an  investment;  if  the  mortgage  were  exemp- 


>va» 


not  only  in  the  city  but  in  the  country,  we  would  be  able  to 
boiTOw  money  on  mortgage,  I  think,  at  a  rate  not  exceeding  four 
per  cent,  and  that  would  be  a  great  help  to  the  farmer;  it  would 
bring  him  considerable  prosperity;  it  would  make  his  property 
available  for  use  and  furnish  the  capital  necessary  for  it. 

By  the  Chairman. 

Q.  Was  that  loan  on  city  or  country  property?  A.  It  was  city 
[property;  but  the  same  thing  would  apply  with  more  force  on 
country  property ;  he  would  say :  "  We  are  sure  to  be  caught." 

Q.  Is  it  your  experience  that  mortgages  are  universally  taxed? 
|rA.  No,  sir;  by  no  means,  but  there  is  always  the  fear  that  the 
I  assessor  will  catch  them. 

Q.  They  are  taxed  in  exceptional  cases?    A.  Yes,  sir;  private 
I  individuals   solicited  to  loan   their  money  upon   mortgage   will 
(always  say:  "Well,  I  would  sooner  have  some  stocks,  because 
it  any  time  the  assessors  may  catch  that  mortgage,  and  either 
|  com  pel  me  to  pay  U  or  do  a/s  the  prudent  ones  do  now;'1    all  pru- 
it  investors  put  in  a  paragraph  saying  that  should  the  lender  of 
us  money  be  at  any  time  called  upon  to  pay  a  tax  upon  it,  or 
tould  it  be  returned  by  the  borrower  for  taxation,  or  any  attempt 
k  on  his  part  to  have  that  money  taxed,  that  the  mortgage 
11  immediately  become  due;  that  is  the  printed  form  of  mort- 
ige  used  by  most  of  our  lenders  now. 

By  Mr.  Hamilton. 

Q.  Do  you  regard  the  income  of  property  as  a/  fair  basis  of  taxa- 
A.  No,  sir;  I  do  not;  because  a  large  amount  of  property 
held  either  vacant  or  with  deficient  improvement,  bringing  no 
icome  but  held  because'  at  some  future  time  the  owner  expects 
get  a  large  premium  by  holding  it  out  of  use;  I  think  that  the 
j  plan  would  be  to  separate  the  values  of  the  improvements 
the  value  of  the  land  and  to  tax  them  for  what  it  was  worth  — 
it  income  could  be  got  out  of  it  by  its  best  use. 
.Q.  What  are  your  views  upon  what  is  known  as  the  local  option  • 
A.  I  think  that  would  be  an-  excellent   thing;  I  think  it 
mid  result  in  some  out  of  town  county  putting  their  tax  wholly 


upon  personal  property  and  exempting  real  estate,  and  I  think  thai 
would  happen  for  just  one  year;  they  Avould  see  that  it  prompt 
drove  all  the  personal  property  practically  out  of  the  county 
the  next  year  they  would  repeal  the  wrhole  thing;  it  would  be, 
appears  to  me,  a  method  of  getting  some  one  to  make,  at  their  owi 
expense,  and  to  make  thoroughly,  an  experiment  which  would 
invaluable  to  us;  it  would  be  the  best  object  lesson  that  ever  v 
had;  suppose  Westchester  county  exempted  all  real  estate  and 
it  all  on  personal,  we  would  see  a  visible  stream  coming  to  1 
York  and  Kings  county;  the  most  foolish  county  would  be 
ficed  and  I  think  that  is  the  best  one  to  sacrifice. 

By  the  Chairman. 

Q.  The  sentiment  of  Westchesteiv  county  is  very  much  against 
the  taxation  of  personal  property?  A.  I  believe  that;  I  took  ifi 
for  that  reason. 

By  Mr.   Grueiither. 

Q.  You  think  local  option  is  a  good  thing?     A.  Yes,  sir.      -f 
Q.  It  virtually  means  the  exemption  of  personal  property?    A, 

I  think  it  would  be  the  ultimate  result;  in  New  York  city  tha 

would  be  the  immediate  result  of  it. 

By  Mr.  Hamilton. 

Q.  What  have  you  to  say  in  regard  to  the  question  of  levying 
an  excise  tax  by  the  State  for  State  purposes  as  it  is  done  in 
Pennsylvania?  A.  I  an1  here  to  some  extent  as  the  representative 
of  the  New  York  Tax  Reform  Association;  we  have  taken  n< 
position  upon  that,  and  anything  I  should  give  you  upon  that  sub 
ject  would  be  merely  my  personal  opinions;  I  do  not  think 
epeak  for  any  united  body  of  citizens  in  that  way. 

Q.  Is  there  any  united  opinion  in  regard  to  the  present  rate  o 
interest  amongst  the  members  of  your  association?  A.  Theiv  i; 
not, 

Q.  Upon  the  queslion  of  taxation  of  savings  bank  deposits?  A 
All' these  things  are  outside  of  our  platform;  this  subject  of  taxa 
tior.  is  a  ATery  larc;e  one;  it  has  numberless  ramifications  and  i 


475 

any  one  knows  one  branch  it  will  keep  him  very  busy;  the  best 
thing  is  to  try  and  find  governing  principles;  every  man  says: 
"Would  this  be  expedient?"  "Would  that  hit  that  man  hard?" 
"Wrould  this  strike  this  part  of  the  country?"  The  tendency  of 
legislators  as  well  as  others  is  to  try  to  tax  this  \vay  instead  of 
saying:  "Find  out  what  the  principle  is." 

By  Mr.  Guenther. 

Q.  Will  you  tell  me  why,  if  I  have  f  50,000  and  no  real  estate, 
and  you  $50,000  real  estate  and  no  money,  my  money  being  loaned 
out  on  bond  and  mortgage,  why  I  should  not  contribute  a  fair 
proportion  of  money  to  meet  the  expense  of  the  government  as  you 
do?  A.  Because  even  as  a  holder  of  personal  property  you  must 
use  real  estate,  and  there  you  will  pay  a  fairer  proportion  of  taxes 
than  can  be  collected  from  you  in  any  other  way. 

Q.  Suppose  I  live  in  Pennsylvania  and  my  money  is  over  here? 
A.  Even  so,  your  money  in  one  way  or  another  will  pay  that  tax; 
what  are  you  going  to  invest  your  money  in? 

Q.  Government  bonds,  manufacturing  or  railroad  bonds?  A. 
Let  us  take  that  separately;  we  encourage  government  bonds 
may  be  floated  at  a  low  rate  of  interest,  and  that  was  a  war 
necessity,  but  under  any  system  which  you  gentlemen  may  propose 
you  can  not  tax  those  government  bonds  so  that  we  need  hardly 
consider  that  matter;  that  is  a  United  States  law  at  present;  you 
can  not  tax  those. 

By  the  Chairman. 

Q.  As  all  the  earning  capacity  of  money  loaned  on  mortgage  is 
fixed  by  statute,  is  it  not  a  fact  that  the  earning  capacity  of 
improved  real  estate  is  largely  fixed  by  necessity?  A.  I  think 
that  the  earning  capacity  of  money,  although  it  is  nominally 
fixed  by  statute,  is  actually  fixed  by  necessities;  as  a  lawyer,  for 
instance,  if  I  have  money  to  loan  and  I  can  not  loan  it  at  six  per 
cent,  and  the  rate  is  higher,  in  some  way  or  other,  as  exemption 
from  taxes,  I  think  that  a  man  will  pay  the  price. 

Q.  Is  it  not  a  fact  that  owners  of  real  estate  in  a  community 
New  York  fix  their  rental  for  instance  upon  the  theory  that 


476 

taxation  and  interest  must  be  taken  care  of?    A.  I  think  it  mi 
be  fixed  entirely  outside  of  the  owners;  I  think  the  rate  is  fixed 
the  competition  in  the  markets;  I  do  not  think  the  owners  cj 
fix  the  rate;  if  they  could  they  would  charge  us  all  for  the  privil< 
of  living  on  the  earth. 

By  Mr.  Ainsworth. 

Q.  Here  is  a  farmer  that  barely  makes  a  living;  by  the  side 
him  is  a  money  lender,  with  $100,000  invested  in  bonds  and  mo 
gage;  he  lives  in  a  house  and  lot  that  is  worth  $2,000;  you  sa; 
that  this  thing  is  equalized  by  his  having  to  pay  a  larger  ren 
because  of  the  land  he  occupies;  between  the  farmer  and  the  man 
who  has  $100,000  and  lives  in  a  place  that  costs  $2,000,  where  is 
the  equalization?  A.  In  the  first  place,  the  rich  man  is  usually 
a  large  owner  of  real  estate;  when  a  man  has  $100,000  he  doe« 
not  live  in  fact  in  a  $2,000  house,  and  even  if  he  did,  his  $100,000 
has  got  to  be  somewhere  or  other;  there  are  only  two  possible 
ways;  either  it  is  invested  in  something  where  it  is  producing  o,? 
else  it  is  loaned  to  this  farmer  next  door;  if  it  is  loaned  to  this 
farmer  next  door  you  tax  it. 


3T»- 


By  Mr.  Guenther. 

Q.  Would  not  the  ultimate  result  be  that  if  you  exempted  per- 
sonal property  from  taxation  there  would  be  a  great  desire  for 
all  owners  of  real  estate  to  dispose  of  that  real  estate  and  get 
ready  money,  thereby  reducing  the  value  of  farms  throughout  the 
State?  A.  No,  sir;  I  think  the  effect  would  be  the  contrary;  that 
wherever  personal  property  would  be  exempted  that  personal 
property  would  be  attracted  to  that  place,  and  that  would  raise 
the  price  of  everything. 

Q.  You  don't  think  the  rich  man  in  the  city  would  be  attractive 
to  a  farming  community?  A.  I  do;  I  would  like  to  attract 
Jersey  capital  or  Ohio  capital. 

Q.  You  do  not  anticipate  you  can  attract  by  the  moving  taxa- 
tion upon  personal  property  wealthy  men  from  the  city  to  live  in 
the  country  because  there  is  an  exemption  from  taxation?  A. 
No;  I  don't  think  I  could  attract  them  to  live,  but  I  could  attract 
them  to  invest  in  the  country. 


477 

Q.  If  the  f .inner  was  necessarily  a  borrower,  but  till  farmers  are 
not?  A.  No,  sir;  but  he  gets  an  indirect  benefit. 

By  the  Chairman. 

Q.  The  testimony  of  the  former  witnesses  that  we  have  had 
has  been  to  the  effect  that  at  least  one-half  of  the  farms  in  the 
State  are  not  mortgaged?  A.  I  suppose  there  is  no  doubt  that 
is  true. 

By  Mr.  Ainsworth. 

Q.  You  made  a  statement  that  the  tax  apon  personal  properly 
injured  the  farmer  from  the  fact  that  his  machinery  and  stock 
were  "visible  and  tangible  and  therefore  assessed;  do  you  base 
that  upon  a  knowledge  of  the  fact?  A.  The  farmer  does  not  ordi- 
narily pay  under  our  present  system  any  personal  tax  to  speak 
I  of,  because  he  elects  the  assessor,  and  he  says  to  the  assessor: 
"  If  you  tax  me  on  personal  property  I  won't  vote  you  next  year/' 
but  under  the  listing  system,  as  in  Ohio  and  California,  the  farmer 
|  does  pay  a  proportion  of  the  personal  tax. 

Q.  In  this  State  he  does  not?  A.  In  this  State  he  docs  nut. 
Q.  Have  you  given  any  attention  to  the  effect  of  the  listing 
law  in  Ohio  as  to  the  effect  upon  the  assessment-roll?  A.  Fes, 
i  sir ;  the  experience  in  Ohio  has  been  that  the  first  year  they  got 
[a  great  deal  of  personal  property,  and  every  year  it  slips  down 
and  less,  not  as  much  as  one  would  expect,  perhaps,  because 
ja  State  like  Ohio  will  grow  in  spite  of  anything  you  may  do,  but 
it  checks  the  natural  increase  of  personal  property. 

Q.  It  is  now  in  use  in  sixteen  States?    A.  About;  if  all  the  States 
'ere  to  adopt  the  listing  system,  there  is  no  doubt  it  would  tax 
10  personal  property  more  than  you  do  now. 
Q.  After  you   have  adopted  it  in  the  forty-four  States,  have 
an  idea  that  the  people  would  live  in  the  jungles  in  Africa 
ither  than  in  free  America?    A.  I  do  not  think  it  would  tend  to 
•ease  the  American  colonies  in  London! and  Paris;  they  are 
rery  large  colonies  there  now. 

Q.  There  is  a  feature  in  the  Ohio  law  that  if  a  person  does 
correctly  return  his  personal  property  there  is  not  only  an 


-1-78 

arbitrary  assessment  within  the  power  of  the  assessors,  but 
fine  also?    A.  Yes,  sir. 

Q.  Is  riot  that  a  sufficient  answer  to  the  objection  that  peo] 
would   not  correctly  return?     A.  They  do  not  correctly  r«-l:ui 
wo  know  very  well  that  the  most  they  have  gotten  is  forty 
r.ent  on  personal  property  and  that  the  universal  testimony 
that  the  value  of  personal  property  is  at  least  equal  to  the  vali 
of  real  estate,  and  then  a  part  of  that  comes  from  things  whicl 
under  our  state  of  affairs,  would  be  taxed;  for  instance,  ban* 
stock;  those  would  be  taxed  anyway;  there  is  a  very  radical  dil 
fereuc  between  the  conditions  of  real  estate  in  the  city  where  i.1 
is  active  and  the  conditions  of  real  estate  in  the  country  wlu 
real  estate  is  good  for  nothing,  except  to  raisa  wheat  on:  one  ii 
an  investment  for  revenue  and  the  other  is  his  business;  if  \< 
increase  the  tax  upon  real  estate  you  consequently  increase  tl 
tax  and  his  revenue  does  not  increase  in  proportion;  while  here 
the  city,  if  you  increase  it  you  add  to  the  productive  power; 
farm  that  is  worth  $150  for  taxation  will  raise  forty  bushels  ,>f 
wheat  to  the  acre;  a  farm  that  could  be  bought  for  forty  dollars 
an  acre  would  raise  just  as  much  wheat;  I  think  if  you  raise  the 
selling  value  of  that  farm  you  would  raise  its  practical  productive 
power;  that   is  to  say,  your  friend  has  a  farm  and   we  make 
our  laws  so  as  to  attract  a  manufacturing  establishment  within 
a  mile  of  his  farm;  it  will  only  raise  150  bushels  of  wheat  j\?st 
the  same,  but  he  has  a  market  right  close  now,  and  he  can  sell 
t<j  them. 

Q.  Is  it  not  true  that  all  manufacturing  is  now  seeking  centers 
of  population  and  being  driven  from  the  country;  it  is  in  the 
locality  that  I  live  in?  A.  Is  it  not  true  that  they  are  begin nin*. 
to  tax  them  there? 

Q.  Xo,  sir;  i  am  myself  interested  in  a  factory  that  is  lo-duj 
moving  to  Syracuse  simply  from  the  fact  that  there  is  a  munbei 
of  skilled  people  that -they  can  employ;  I  know  from  the  otliei 
manufacturers  that  yiat  is  the  reason  that  actuates  them?  A 
I  think  that  may  be  the  tendency;  of  course,  that  is  a  ver; 
large  question;  that  is  the  whole  question  of  the  aggregation 
population  in  cities. 


479  „ 

Q.  Have  you  ever  thought  of  the  acreage  that  was  cultivated 
per  capita,  and  its  increase  in  this  country?  A.  To  that  subject 
I  have  never  given  any  attention;  I  am  not  posted  on  the  subject 
at  ull. 

Q.  If  The  acreage  per  capita  under  cultivation  in  the  Tnited 
•s  lias  doubled  since  1850,  then  you  would  think  that    the 
question  of  taxation  would  have  very  little  effect  upon  ih<>  far- 
income  -would  you  not?     A.  You  mean  to  say  that  in  spite  of  the 
tax  laws  it  has  doubled? 

-:  O.  As  a  matter  of  fact,  it  has  doubled  per  capita  since  1850; 
is  not  thai  The  controlling  feature  in  his  income  rather  iban  ihe 
taxation;  the  acreage  per  capita  has  actually  doubled  since  JS50;- 
is  not  thai  the  controlling  feature  rather  than  the  question  of 
taxalkn.'  A.  I  would  not  want  to  pronounce  upon  that  question 
offhand;  the  machinery  enables  the  cultivation  of  larger  areas 
than  it  has  been  previously;  that  is  the  question  I  am  not  posted 
on;  it  is  a  subject  that  should  be  considered  to  what  extent  that 
is  duo  to  the  fact  that  a  man  car.  now  cultivate  three  acres  whore 
he  could  cultivate  one. 

Q.  He  can  not  increase  his  own  acreage,  can  he?    A.  No,  sir. 

Q.  The  criticism  which  I  make  upon  the  theories  is  here  right 
| hi  the  city  of  New  York  where  increased  business  adds  revenue 
to  real  estate;  the  subject  of  taxation  of  personal  property  I 
conceive  affects  the  income  of  real  estate  here,  but  I  think  that 
if  you  were  in  the  farming  community  and  saw  the  utter  impos- 
|sibiliiy  of  increasing  the  production  or  the  price  per  acre  of  the 
ier''s  land,  that  you  must  take  a  different  view  of  it?  A.  Tf 
farmer  thinks  that  it  would  help  him  to  tax  the  personal 

)perty,  we  have  the  county  option  bill  proposed;  under  that  he 
tax  it. 

Q.  Must  not  he  necessarily  think  that  if  he  lives  in   a  given 
irea  that  must  produce  towards  the  county  expenses  a  iixed  sum, 
[that  you  as  a  money  lender  living  in  his  community,  whatever 
pay  decreases  the  amount  that  he  must  pay;  I  mean  county 
(taxes?    A.  Yes,  sir;  it  is  an  argument  that  strikes  as  a  practical 

nnonstration,  is  it  not;  whatever  the  city  pays  towards  county 

ixes  comes  off  him. 


480 

Q.  Or  whatever  the  personal  property  holder  living  in  his 
locality  pays  reduces  the  amount  he  pays?  A.  That  would  b; 
true  provided  it  could  be  got. 

Q.  Whatever  he  does  get  reduces  it  so  much?    A.  No,  sir;  nol 
if  the  result  of  getting  more  personal  property  results  in  gettii 
more  of  his  personal  property. 

Q.  He  has  none?    A.  He  has  his  machines  and  cattle  and  gr; 
there,  all  personal  property  —  household  furniture. 

Q.  But  the  other  man  has  that  also;  I  am  speaking  now 
the  surplus;  but  if  there  is  a  net  result  in  your  plan  for  increas 
ing  the  tax  on  personal  property  and  getting  more  of  it;  if  ii 
results  that  you  get  ten  per  cent  more  of  the  city  property  am 
thirty  per  cent  more  of  the  county  property  I  don't  see  where  th< 
farmer  is  benefited. 

By  Mr.  Hamilton. 

Q.  Under  the  present  law  personal  estate  when  taxed  is  allowed 
a  deduction  for  the  indebtedness  of  the  owner;  does  your  associa- 
tion favor  the  continuance  of  that  exemption  or  offset?  A.  It 
does. 

Q.  Notwithstanding  the  fact  that  complaint  is  made  that  no 
similar  allowance  is  made  in  the  case  of  real  estate  and  that  there- 
fore there  is  an  inequality?  A.  It  does,  notwithstanding  that 
fact. 

Q.  Do  you  believe  that  it  should  be  refused  to  real  estate 
and  continued  in  the  case  of  personal  estate  —  this  allowance? 
A.  Yes,  sir. 

Q.  Upon  what  ground?  A.  Because  any  attempt  to  tax 
mortgage  really  gets  to  the  borrower;  it  would  simply  result 
in  having  to  pay  six  per  cent  instead  of  having  to  pay  four; 
Dr.  Beeks  has  proposed  year  after  year  in  the  Assembly  a  bill 
exempting  mortgages  from  taxation;  last  year  it  never  got  out 
of  the  committee;  only  last  year  he  modified  it  by  proposing  the 
exemption  of  mortgages  bearing  four  per  cent  or  less  from  taxa- 
tion; I  am  of  the  opinion,  and  most  of  those  with  whom  I  have 
talked  coincide  in  the  opinion,  that  the  passage  of  that  bill  would 
reduce  the  rate  of  interest  upon  mortgages  to  four  per  cent,  and 
that  it  would  extend  to  the  country  as  well  as  to  the  city,  and  it 


481 

seems  reasonable,  because  it  is  sensible  and  it  appeals,  I  think  to 
the  farmer  constituents;  it  would  hardly  be  sensible  when  a 
man  loans  his  money  at  the  liberal  rate  of  four  per  cent  —  it 
would  hardly  be  right  to  tax  him  one  and  a  half  per  cent. 

By  Mr.  Ainsworth. 

Q.  Jf  you  double  up  property  you  cut  the  rate  in  two,  do  you  not?' 
|  A.  If  doubling  the  property  you  decrease  the  value  of  real  estate, 
jthen  do  you  not  cut  the  rate  in  two? 

Q.  Real  estate,  farming  property,  is  simply  worth  what  it  will 
produce?    A.  If  by  taxing  personal  property  you  reduce  the  value 
the  land  — 

Q.  You  don't  reduce  the  value  of,  the  land  unless  you  reduce  its 
reducing  value;  the  city  property  has  another  value  than  a 
L,  lias  it  not?  A.  That  is  only  true  within  limits;  even  the 
farmer  occasionally  sells  and  occasionally  expects  to  sell;  there 
is  now  a  considerable  demand  all  over  the  country  for  residences 
ind  estates  and  places  even  at  a  distance  from  the  railroads;  all 
iat  affects  the  value  of  farms. 

Benjamin  F.  Komaine,  called  as  a  witness,  being  duly  sworn, 
[;estified  as  follows: 

By  Mr.  Hamilton. 

\.  What  is  your  business?    A.  I  am  a  lawyer  and  also  a  real 
ite    owner  —  improved   and  vacant  property  in  the   city  of 
York.  « 

Are  you  a  member  of  the  Tax  Reform  Association?    A.  I 
not  an  actual  member;  I  am  interested  in  its  work,  and  have 
led  them  in  various  ways;  last  year  I  appeared  with  others 
behalf  of  the  local  option  bill,  and  I  have  appeared  before  legis- 
ive  committees;  I  opposed  with  other  members  of  the  Real 

ite  Exchange,  the  so-called  Dempsey  bill. 

Q.  You  are  a  member  of  the  Real  Estate  Exchange?       A. 
sir. 

You  have  given  attention  to  the  question  of  taxation?    A. 
lewhat  so. 

Q.  Have  you  any  views  to  express  to  the  committee  in  regard 
modifying  the  present  laws  on  the  subject  of  taxation?    A.  I 
01 


482 

should  say  most  decidedly  that  the  local  option  bill  should  become 
a  law ;"  I  do  that  for  the  reason  that  it  may  not  be  thought  proper 
thai  ideas  emanating  altogether  from  residents  of  large  cities 
should  be  inflicted'  so  to  speak,  on  rural  communities ;  I  feel  that 
a  bill  like  that  is  fair,  and  that  the  rural  counties  will  eventually 
see  the  justice  of  it,  in  securing  the  abolition  of  personal  property^ 
tax  throughout  the  State;  I  believe  that  personal  property  taxaJ 
tion  is  radically  wrong  in  any  community;  I  consider  that  in  almost! 
every  case  personal  taxation  becomes  double  taxation;  as  a  real^ 
estate  owner  I  am  very  anxious  that  personal  property  taxation] 
should  be  abolished,  specially  for  this  reason;  in  New  York  city, 
for  instance,  very  large  sums  of  money  are  loaned  by  saving* 
banks  and  life  insurance  companies  on  bonds  and  mortgages;  they 
aro  exempt;  individuals  are  threatened  with  a  menace  of  taxation/: 
also  executors  and  trustees  and  others;  they  do  not  loan  at  tb.e 
rates  at  which  they  might  loan  were  they  free  from  this  menace 
of  taxation,  as  I  stated  to  Mr.  Eyan's  committee  last  year;  it  is 
a  menace  more  than  anything  else,  as  the  law  can  not  be  enforce! 
and  no  listing  bill  can  be  enforced,  but  the  menace  is  held  over 
all  owners  of  real  estate,  and  in  all  probability  life  insurance 
companies  and  savings  banks  get  a  higher  rate  for  that  very 
reason;  competition  should  be  made  very  much  greater  between 
the  savings  banks  and  life  insurance  companies  on  the  one  hand 
and  individuals  on  the  other,  provided  personal  property  taxation 

were  abolished. 

• 

By  Mr.  Guenther. 

Q.  Do  you  know  of  any  reason  why  a  bond  and  mortgage  held  by 
a  life  insurance  company  should  be  exempt  from  taxation  anc 
one  held  by  an  individual  should  pay?  A.  That  is  an  illustration 
of  my  theory  of  the  injustice  of  the  present  taxation. 

Q.  You  don't  know  why  it  should  be  continued?  A.  I  do  not 
that  i?  in  support  of  my  argument  in  favor  of  abolition  of  persona 
taxation;  we  have  those  enormous  exemptions  such  as  you  hav< 
stated  —  all  savings  banks,  all  life  insurance  companies,  when 
the  money  is  in  the  shape  of  accumulation  of  policyholders,  ai 
was  testified  at  a  former  meeting  of  this  committee. 


4S3 

By  Mr.  Hamilton. 

Q.  Is  the  value  of  all  city  property  determined  by  its  revenue 
the  same  way  that  country  real  estate  values  are  fixed?  A. 
is  determined  by  supply  and  demand. 

Q.  Is  it  different  from  the  law  fixing  the  value  of  agricultural 
>perty?  A.  There  are  economic  questions  involved  in  the  use 
agricultural  property  that  are  perhaps  hardly  within  the  scope 
this  present  committee,  but  I  know  they  are  always  brought 
when  a  discussion  of  this  kind  occurs;  Mr.  Coudert,  who  is 
e  an  authority  on  economic  questions,  raised  that  argument 
fore  General  Curtis'  committee  in  opposing  the  Dempsey  listing 
[;  he  said  he  would  be  very  glad  to  give  them  his  views  on  that 
it;  his  brother  is  a  large  farmer,  and  I  think  they  are  both 
*  familiar  with  the  subject;  economic  questions  naturally 
at  the  same  time  with  discussion  of  taxation 

By   Mr.   Malby. 

|Q.  Would  you  confine  the  taxes  exclusively  to  real  estate?    A. 
to  individuals ;  I  am  in  favor  of  a  greater  tax  on  certain  classes 
corporations  than  now  exist;  for  instance,  I  think  all  of  us 
very  much,  who  are  not  Western  Union  stockholders,  that 
Western  Union  Telegraph  Company  pays  so  little  in  the  city. 
You  think  that  the  tax  on  corporations  might  be  properly 

A.  On  certain  classes  of  them. 

Religious  corporations?    A.  I  do  not  believe  in  any  collateral 
iptions;  I  believe  that    every    corporation    should  be  taxed 

the  law. 

I  have  reference  to  business  corporations?    A.  Excuse  me; 
not  say  that  with  reference  to  business  corporations;  I  am  not 
to  say  except  in  specific  instances;  I  know  that  corpora- 
have  been  largely  increased  in  the  State  of  New  Jersey  on 
mnt  of  certain  discriminations  in  this  State. 
Could  not  that  be  overcome  by  taxing  foreign  corporations 
business  in  this  State  the  same   as   you  tax  domestic  cor- 
ms?    A.  Possibly  so;  that  has  been  the  subject  of  recent 
idication;  that  rnig<ht  possibly  work. 

The  only  thing  we  would  lose  in  that  case  would  be  the  fee 
the  creation  of  the  corporation?    A.  They  are  taxed  on  that 
Ity,  you  know,  such  personalty  as  they  have  here,  and  they 


484 


are  taxed  every  year  on  that;  it  would  be  an  inducement 
their  principal  office  here  if  they  were  not  taxed  only  on 
capital. 


nav< 


By  Mr.  Guenther. 

Q.  Has  not  a  corporation  organized  in  this  State  a  better  busi 
ness  standing  than  one  organized  in  New  Jersey  or  West  Virginia 
A.  Regarding  the  latter  State  I  think  it  quite  possible;  regardinj 
Jersey  I  think  there  is  no  distinction;  some  of  our  largest  corpora 
tions  are  incorporated  under  the  laws  of  New  Jersey. 

Q.  Coming  back  to  the  proposition  to  exempt  personal  property 
from  taxation,  would  that  increase  the  taxation  on  real  estate 
A.  It  wrould,  but  it  would  make  the  value  greater. 

Q.  In  view  of  the  fact  that  a  farmer  can  hardly  derive  a  livin,; 
from  his  farm  would  it  not  be  a  burden  from  the  farmer  to  reli<*i 
personal  property  from  taxation?    A.  There  are  economic  qu< 
tions  involved  in  that  aside  from  the  mere  question  of  taxation 
and  those  questions  are  well  known  to  those  who  have  sbud 
them;  I  don't  think  it  would  come  so  hard  on  the  farmer,  becaus 
the  amount  of  personal  tax  is  very  small  any  way,  and  the  effec 
would  be  indirectly,  if  no  directly,  upon  the  farmer  in  his  favor; 
would  get  a  lower  rate  of  interest,  for  instance,  upon  bond  ai 
mortgage;  suppose  I  OA\?n  a  piece  of  property  and  want  to  sell 
if  money  is  cheap  I  have  a  great  many  more  purchasers  for  it. 

By  Mr.  Ainsworth. 
Q.  Supposing  you  own  a  piece  of  land  and  do  not  want  to  se 
it,  but  want  to  raise  potatoes  on  it?  A.  That  is  an  economic  que 
taon;  it  is  a  question  whether  or  not  you  are  competing 
regions  raising  potatoes  more  cheaply  than  you  do;  Mr.  Coude 
took  the  ground  that  the  rural  regions  of  New  York  do  not  rai 
what  they  should  raise  for  the  supply  of  the  city;  that  there  a 
a  great  many  things  we  should  be  glad  to  get  and  would  be  bett 
than  attempting  to  raise  commodities  that  they  attempted  to  rai 
in  competition  with  the  west. 

By  Mr.  Guenther. 

Q.  If  personal  property  was  not  taxed  that  same  competition 
raising  potatoes  somewhere  else  would  still  continue,  would 


4-85 


;iiot?  A.  You  can  not  prevent  competition  with  the  purely  agri- 
ultural  regions  of  the  west;  I  am  told  that  a  change  might  be 
de  for  the  benefit  of  the  agricultural  regions  of  this  State  by 
•aising  different  commodities. 

By  the  Chairman. 

Q.  Are  you  in  favor  of  the  separation  of  the  State  and  local 
jtems  of  taxation?  A.  Most  decidedly;  I  believe  friction  would 
ise  then. 

Q.  You  think  that  is  practicable  if  real  estate  should  be  relieved 
Itogether  from  State  taxation  for  State  purposes?    A.  I  do. 
Q.  And  that  the  local  authorities  of  the  various  counties  ought 
have  the  power  to  assess  such  property  as  they  deem  best  for 
ie  purpose  of  defraying  the  expense  of  their  own  local  govern- 
iient?    A.  I  do;  and  I  hope  to  support  again  before  the  com- 
Lttee  Mr.  Farquhar's  bill  for  that  purpose. 

Q.  Are  you  in  favor  of  exempting  church  property  without 
ird  to  its  value,  or  would  you  limit  the  amount  of  exemption? 
I  have  not  looked  especially  into  church  exemptions,  and  could 
)t  say  positively  about  that;  but  I  would  like  to  state  that  T  am 
favor  of  a  complete  abolition  of  exemption  with  reference  to 
iteral  inheritance  taxation;  I  think  it  is  very  unjust  to  make 

exemptions  indeed. 

|  The  committee  went  into  executive  session  and  adjourned  to 
it  February  1,  1893,  in  Albany,  at  7  p.  m. 


Albany,  X.  Y.,  February  1,  1893. 
?he  committee  met  pursuant  to  adjournment. 

llliam  H.   Parsons,   called  as  a  witness,  being  duly  sworn, 
ified  as  follows: 
By  Mr.  Hamilton, 

Your  name  is  William  H.  Parsons?    A.  Yes,  sir. 

You  reside  in  the  city  of  New  York?    A.  My  residence  is 
Bye,  Westchester  county,  N.  Y. 

You  carry  on  business  in  the  city  of  New  York?    A.  Yes,  sir. 

Your  business  is  what?    A.  Paper  manufacturer. 


486 

Q.  Are  you  also  a  member  of  the  New  York  board  of  trade 
transportation?    A.  I  am  one  of  the  vice-presidents. 

Q.  That  body  has   appointed  a  committee  on  taxation' 
Yes,  sir. 

Q.  Of  which  you  are  also  the  chairman?    A.  Yes,  sir. 

Q.   And   as   such   you   appear   before   this   committee   of 
Senate  and  Assembly  to-night?    A.  Yes,  sir. 

Q.  How  long  have  you  been  engaged  in  business  in  the  cil 
New  York?    A.  Nearly  forty  years;  I  think  to  be  exact  thirl 
eight  years. 

Q.  During  that  time  you  have  given  considerable  attention  I 
the  examination  of  the  question  of  taxation?  A.  As  far  as  circun 
stances  would  permit.  • 

Q.  So  far  as  it  affects  the  business  interests  of  the  community  i 
which  you  have  resided  ?  A.  I  have. 

Q.  And  your  committee  has  also  given  attention  to  that  fac 
have  they  not?  A.  Yes,  sir. 

Q.  Now,  what  have  you  to  say  on  behalf  of  the  board  aa  1 
the  question  of  modifying  the  present  laws  relating  to  taxatio 
assessment,  and  interest,  so  far  as  they  affect  the  agriculture 
manufacturing,  commercial,  laboring,  banking  and  other  interes 
of  the  State?    A.  What  I  have  to  say  would  simply  be  confifl 
to  a  resolution  which  was  adopted  by  the  board  of  trade  a 
transportation,  and  which,  if  you  will  permit  me,  I  will  read; 1 
resolution  is  as  follows :  "  That  it  shall  be  the  policy  of  the  Sta 
of  New  York  to  attract  rather  than  repel  business  enterprise 
that  our  laws  should  be  at  least  as  favorable  as  those  of  sist 
States,  and  that  a  business  enterprise  conducted  under  a  co-opei 
tive  or  corporate  form  should  not  pay  a  tax  higher  than  a  1 
business  conducted  by  an  individual  or  firm,  and  should  be 
free  from  inquisitorial  interference."    This  paper  was  voted 
a  meeting  of  the  board  of  trade  and  transportation  which  " 
held  on  the  fourteenth  of  December;  the  committee  consisted 
Seth  Thomas,  John  F.  Henry  and  myself,  as  chairman;  we  wt 
appointed   to   convey  this  paper  to  this  honorable   committ 
and  fearing  possibly  that  we  might  not  be  granted  a  heari) 
we  addressed  to  the  committee,  under  envelope  to  Senator  McC. 


land,  a  memorial  which  had  been  signed  by  the  committee ;  possibly 
it  might  be  well  for  me  to  say  to  you  that  the  board  of  trade  and 
transportation  represents,  I  think,  in  the  neighborhood  of  3,000 
membership,  eight  or  nine  hundred  which  are  firms  or  corporations, 
and  the  other  members  are  individual  members;  that  membership 
represents  representative  men  in  all  departments  of  the  commercial 
interests  of  the  city  of  New  York;  I  need  to  stop  to  specify  it; 
I  think  it  would  be  difficult  to  find  any  interest  of  any  magnitude 
that  was  not  represented  among  the  members  of  the  board;  the 
other  members  who  are  here  will  speak  upon  a  general  subject  of 
taxation;  I  will  confine  myself  simply  to  this  resolution;  it  is  well 
known,  I  fancy,  to  all  of  the  committee  that  during  the  past  dozen 
or  more  years  the  commerce  and  the  commercial  interests  in 
New  York  have  grown  immensely;  the  prosperity  of  the  State  is 
largely  dependent  upon  those  commercial  interests;  I  think  if 
you  were  to  blot  out  the  commercial  interests  of  the  city  of  New 
York  you  would  take  away  from  the  State  of  New  York  a  large 
measure  of  its  present  prosperity;  when  the  commercial  interests 
are  in  a  prosperous  condition  the  agricultural  interests  are  helped 
to  a  greater  or  less  extent;  when  the  commercial  interests  are 
prosperous  a.  larger  amount  of  money  is  in  circulation  —  is  spent 
for  food  products  and  other  purposes  which  go  more  or  less 
directly  into  the  hands  of  the  agricultural  interests  or  those  who 
|  represent  the  agricultural  interests ;  when  the  commercial  interests 
depressed,  and  those  who  are  interested  in  them  economize, 

effect  is  felt  upon  the  agricultural  interest;  therefore  it  seems 

me  that  the  two  are  very  closely  bound  together,  and  when  I 
fer  to  the  commercial  interests,  I  mean  manufacturing,  shipping, 

iking,  trade  and  all  the  different  departments  of  the  commercial 
I  interest  which  go  to  make  up  the  whole;  in  the  increase  of  business 
jand  in  order  that  there  may  be  a  stability  to  firms  or  manufactur- 
|ing  corporations  doing  business,  the  tendency  for  the  past  few 
I  years  is  for  persons  who  have  been  engaged  in  business  and  who 
ihave  large  enterprises  on  hand,  to  put  those  enterprises  upon  a 
j  more  stable  foundation,  so  that  they  are  not  as  dependent  as 

jy  were  heretofore  on  the  life  of  more  or  less  than  one  man; 
lence    corporations    have    been    formed,    which   are   in   a    sense 


488 

«o-operative,  and  it  seems  to  me,  gentlemen,  that  it  is  a 
evident  proposition,  and  one  that  hardly  needs  any  argument 
my  part,  that  it  is  to  the  interests  of  New  York  to  attract  and 
tivate  rather  than  to  repel  business  enterprises;  to-day, 
trend  is  towards  larger  enterprises,  and  larger  enterprise; 
must  necessarily  be  of  a  co-operative  or  corporation  form,  f( 
the  matter  of  convenience,  or  for  the  matter  of  contnuance  ufl 
death  of  those  directly  interested  in  them;  as  I  have  studied  thi 
question  there  seems  to  me  that  there  will  be  in  the  years 
come  more  corporations  rather  than  less,  and  that  the  tendency 
of  those  persons  engaged  in  large  enterprises,  and  I  speak  fi 
personal  experience  in  this  matter,  is  in  that  direction;  if  nol 
out  of  the  way  I  would  like  to  refer  simply  to  my  own  perso] 
experience;  I  have  been  a  merchant  in  New  York  for  nearly  foi 
years;  my  firm  heretofore  was  W.  H.  Parsons  &  Co;  we  claim  to 
be  a  representative  house  among  the  paper  manufacturers  of  the. 
country;  last  year  our  interests  had  grown  so  large  that  it 
seemed  to  nie  and  those  interested  with  me,  who  are  my  owa 
family,  that  we  should  form  a  corporation;  we  did  form  a  corpora- 
tion ;  it  is  known  by  the  same  name  as  the  firm  name  under  which 
we  have  conducted  business  for  so  many  years;  under  the  laws  of 
the  State  of  New  York  there  were  certain  difficulties  in  our  case 
us  we  thought  in  forming  this  corporation  in  a  manner  that  seemed 
to  us  to  be  prudent;  they  say  an  honest  confession  is  good  for  the 
soul,  and  therefore  we  went  to  the  State  of  Maine,  not  New 
Jersey,  as  so  many  of  my  friends  have  done;  there  were  reasons 
why  we  went  to  the  State  of  Maine;  I  wish  to  explain  that  I  am 
president  of  four  other  corporations  which  are  all  formed  under 
the  laws  of  the  State  of  Maine,  and  we  are  now  doing  business, 
and  I  am  happy  to  say  under  the  sanction  of  the  Secretary  of 
the  State  of  New  York,  as  a  foreign  corporation;  we  are  residents 
of  the  State  of  New  York ;  if  the  facilities  for  forming  a  corpora- 
tion under  the  laws  of  the  State  of  New  York  had  been  as 
favorable  as  they  were  under  the  laws  of  the  State  of  Maine  I 
can  see  no  reason  why  we  should  not  have  preferred  to  have  been 
organized  under  the  laws  of  this  State  and  been  known  as  a  home 
corporation  rather  than  a  foreign  one. 


489 


By  Mr.  Coggeshall. 

Q.  Will  you  state  what  the  objections  were  to  forming  a  cor- 
poration in  this  State?  A.  The  objections,  some  of  then,  have 
been  removed  as  you  know;  there  has  been  quite  a  modification 
if  I  am  not  mistaken  in  the  law  of  corporations  during  the 
I  past  year  and  a  half;  am  I  not  correct? 

Q.  The  law  has  been  modified?    A.  Yes,  sir;  it  was  the  ques- 
Ition  of  taxation  and  of  responsibility;  according  to  the  laws  of 
the  State  of  Maine  that  is  the  end  of  all  resposibility  to  the 
[holders  of  stock,  assuming,  of  course,  that  it  represents  value. 
Q.  One  objection,  then,  was  the  individual  liability  or  respon- 
Lbility   of   the   stockholders,   and   another  was  the   subject   of 
ixation?    A.  It  was  more  economical  to  do  it  there;  in  our  own 
.  as  an  individual  firm,  there  were  certain  offsets  as  against 
mr  personal  estates  in  the  levying  of  taxes;  when  we  transferred 
tose  same  assets  into  a  corporation,  neither  more  nor  less,  we 
rere  liable  to  very  much  heavier  taxation  than  we  were  as  an 
idividual  firm. 

Q.  The  corporation  tax  was  greater  under  the  laws  of  the 
State  than  it  was  as  an  individual  firm?  A.  Yes,  sir;  as  indi- 
Lduals  we  were  not  taxed  except  upon  our  personal  estate;  as  a 
>rporation  we  would  be;  the  reason  why  I  feel  very  greatly 
iterested  in  this  matter  —  you  asked  me  if  I  had  looked  into 
te  subject  of  taxes;  I  have  made  a  good  deal  of  study  of  the  quos- 
m  jof  co-operation;  I  am  now  conducting  two  manufacturing 
iblishments,  of  which  I  am  president,  where  we  have  intro- 
iced  co-operation,  and  I  believe  that  corporations  are  in  a  sense 
>perative  concerns,  and  in  my  judgment  co-operation  of  labor 
id  capital  will  go  farther  towards  settling  the  differences  which 
ist  between  labor  and  capital  than  any  other  one  thing  that  can 
done;  last  week  we  had  the  annual  meeting  of  one  of  our  cor- 
^ations;  I  am  not  going  to  stop  to  tell  you  what  our  co-opera- 
ive  system  is;  we  pay  our  operators  the  going  wages;  there  are 
my  of  them  skilled  men,  some  of  them  receiving  as  much  as  three 
lars  and  a  half  a  day  and  from  that  down  to  a  dollar  and  a  half; 
'hir-h  was  probably  tin-  least  sum  paid  to  any  out1  nialo  operative; 


490 

they  all  have  an  interest  in  the  earning  capacity  of  that  factors ; 
it  is  divided  once  in  six  months;  it  is  based  upon  a  percentage  oi 
the  earnings;  which  is  paid  pro  rata  to  the  employes  that  hs 
been  with  us  or  are  with  us  at  the  time  of  the  division;  it 
purely  a  division;  the  men  understand  that  the  more  money  th< 
corporation  earns  the  more  money  they  get  in  addition  to  iheii 
wages;  they  get  the  same  wages  that  are  paid  to  other  peopl 
in  the  same  positions,  and  they  get  this  bonus,  whatever  it  may 
be,  in  addition;  last  week,  at  the  annual  meeting  of  one  of  thosJ 
corporations,  I  stood  before  100  or  150  men,  and  when  1  say  tfl 
you  that  some  of  those  men  are  receiving  three  dollars  and  fifty) 
cents  a  day,  you  will  readily  understand  that  they  were  inteM 
gent,  and  the  bonus  was  divided  among  them;  and  1  do  not  belie1"* 
that  there  is  another  establishment  in  the  country  where  employer 
and  employe  get  as  near  together,  not  socially,  but  in  intered| 
man  to  man,  as  they  do  in  that  establishment;  1  believe  that  COM 
porn  lions  that  can  be  continued  beyond  the  life  of  one  man  or 
two  men,  or  any  set  of  men,  should  have  as  great  advantage 
in  conducting  business,  whether  it  is  commercial,  nmnufacturinl 
oi1  banking,  as  the  same  persons  who  compose  an  individual 
T  believe  it  to  be  very  much  to  the  advantage  of  the  State  of 
York  thai  those  laws  should  be  so  favorable  that  such  covpoia- 
tions  can  be  formed  under  those  laws  here,  instead  of  seeking 
birthplace  in   some  other  State,   and   therefore  the  point   that 
I  want  to  make  before  the  committee  is,  not  dealing  with  the] 
subject  of  taxation  generally,  but  simply  confining  my  attention 
and  leaving  those  other  gentlemen  to  speak  upon  the  subject  in 
its  broader  sense,  to  the  fact  that  corporations  which  are  in  a 
sense  co-operative  should  be  attracted  rather  than  repelled,  and 
that  to  do  this  the  laws  of  the  State  of  Xew  York  should  1 
favorable  as  the  laws  of  sister  States,  and  that  corporations  hav 
ing  no  larger  amount  of  assets  should  not  be  taxed  simply  because 
they  are  corporations,  when  if  they  were  individual  firms  the.v 
would  largely  escape  the  taxation  which  is  levied  upon  them  as 
corporations;  I  thank  you,  gentlemen,  very  much  for  the  kind 
attention  which  you  have  given  to  what  I  have  had  to  say. 


491 

G.  Waldo  Smith,  called  as  a  witness,  being  duly  sworn,  testified 
as  follows: 

By  Mr.  Hamilton. 

Q.  What  is  your  residence?    A.  New  York  city. 

Q.  And  your  business?    A.  My  business  is  a  wholesale  grocer. 

Q.  How  long  have  you  been  a  resident  of  New  York?  A.  A 
little  over  forty  years  in  business. 

Q.  That  period  in  business?    A.  Yes,  sir. 

Q.  You  are  also  a  member  and  officer  of  the  board  of  trade  and 
transportation?  A.  I  am  a  member. 

Q.  What  office  do  you  hold  in  connection  with  that  board?  A. 
1  am  one  of  the  board  of  directors. 

Q.  You  are  also  a  member  of  the  wholesale  grocers'  association? 
A.  1  am  president  of  the  wholesale  grocers'  association;  that 
includes  all  the  wholesale  grocers  in  this  State  and  four  New 
England  States. 

Q.  You  are  also  a  member  of  the  State  board?  A.  Yes,  sir;  I 
am  chairman  of  the  executive  committee  of  the  New  York  State 
Board  of  Trade;  I  am  a  member  of  the  chamber  of  commerce;  I 
have  a  resolution  from  them,  but  I  do  not  represent  them  officially. 

Q.  You  appear  here  officially  for  the  board  of  trade  and  trans- 
portation? A.  Yes,  sir;  and  the  wholesale  grocers'  association 
and  the  New  York  State  Board  of  Trade. 

Q.  Have  you  given  attention  to  the  question  of  taxation?  A. 
Somewhat;  as  to  corporations  more  particularly  than  anything 
else;  my  main  thought  was  in  relation  to  the  interest  question; 
Mr.  Parsons  has  gone  into  the  other  matter  more  fully,  and  I  would 
like  to  make  most  of  my  statements  in  relation  to  the  interest 
question. 

Q.  Will  you  give  your  views  to  the  committee  on  that  question? 
A.  My  views  are  embodied  very  largely  in  the  resolution  passed 
at  the  last  session  of  the  New  York  State  Board  of  Trade;  the 
following  resolution  was  unanimously  passed,  I  think,  by  that 
body;  it  is  as  follows: 

"  Whereas,  An  effort  is  being  made  to  reduce  the  legal  rate  of 
interest  in  the  State  of  New  York  to  five  per  cent  per  annum, 
therefore, 


492 

"  Resolved,  That  the  passage  of  a  law  making  five  per  cent 
annum  the  legal  rate  of  interest  in  New  York  State  will  not  benei 
an}-  class  of  our  citizens,  but  will  injuriously  affect  all  classes 
be  most  disastrous  to  those  who  are  obliged  to  seek  loans,  and 
New  York  Board  of  Trade  most  earnestly  but  respectfully  protest 
against  the  passage  of  such  a  law  for  the  following  reasons: 

"The  character  and  quality  of  an  article,  together  with  tl 
demand  for  it,  regulate  the  price  for  which  it  is  sold,  and  in  like 
manner  the  character  and  quality  of  any  security  regulate  the 
rate  at  which  loans  thereon  are  sold.  Unquestioned  security 
to-day  readily  commands  loans  at  rates  ranging  from  three  and 
a  half  to  five  per  cent  per  annum  in  this  State  while  poorer  secur- 
ities must  pay  higher  rates,  competition  among  members  reducii 
the  rate  as  low  as  is  consistent  with  the  nature  of  the  security ; 
law  fixing  the  rate  of  legal  interest  at  five  per  cent  could 
compel  the  loaning  of  money  at  that  rate,  but  would  make  it 
impossible  to  affect  a  loan  where  the  risk  was  worth  more  than  tl 
legal  interest  limit.  Capital  seeking  investment  involving  ris 
worth  more  than  the  legal  rate  can  procure  seven  and  eigfct 
cent  elsewhere,  and  in  some  States  as  high  as  ten  per  cent  ai 
would  not,  therefore,  accept  five  per  cent  here  for  like  risk.  Exist 
ing  loans  worth  six  per  cent  would  be  called  in  at  maturity  ai 
could  not  be  replaced  at  the  proposed  legal  rate.  Thus  woul 
follow  innumerable  foreclosures  and  general  distress  among 
classes  in  this  State,  especially  among  owners  of  mortgaged  far 
lands.  The  present  system  of  advancing  on  consignments  of  gooc 
which  enables  manufacturers  of  limited  means  to  carry  onextei 
siAre  business  operations,  would  be  seriously  disarranged.  The 
lower  rate  would  not  be  in  proportion  to  the  risk  involved. 
The  loans  made  thereafter  would  be  of  a  much  smaller  proportion 
of  the  value  of  the  goods  than  at  present,  and  manufacturing 
operations  conducted  under  this  system  would  be  necessarily  cur- 
tailed." 

Now,  that  is  the  whole  story  in  that  resolution;  if  I  should 
enlarge  upon  that  for  an  hour  I  could  not  state  any  more  than  is 
in  that  resolution ;  my  whole  experience  as  quite  a  large  dealer  in 
New  York  and  a  member  of  all  the  commercial  bodies  proves  con- 
clusively that  every  statement  made  there  is  true;  I  remember 


hearing  a  good  many  years  ago  of  a  raei'ciful  man  who  wanted  to 
cut  his  dog's  tail  off  but  didn't  like  to  hurt  it  by  doing  it  all  at 
once,  so  he  arranged  to  cut  off  an  inch  a  day,  and  every  day  an 
inch  was  cut  off  until  the  whole  job  was  done,  and  the  dog,  he 
thought,  didn't  suffer  as  much;  my  theory  is  a  very  simple  one  and 
a  very  just  one  and  it  is  simply  repeal  the  usury  laws  and  the 
establishment  of  a  rate  of  interest;  I  introduced  a  resolution  a 
year  or  two  ago  in  the  board  of  trade  and  transportation  and  to 
my  -surprise  it  was  unanimously  carried;  I  brought  the  same  reso- 
lution to  the  State  board  last  year  and  introduced  it  there  and 
made  an  argument  which  I  have  in  my  hand,  and  to  my  great 
surprise  it  was  voted  for  by  every  single  man  present  except  one; 
only  one  man  voted  against  it;  many  and  many  came  to  me  after- 
wards and  said  they  had  never  given  that  question  any  considera- 
tion; they  supposed  it  was  part  of  holy  writ,  and  had  to  be  main- 
tained, but  when  they  came  to  think  of  it  they  wTere  ready  to 
vote  for  the  repeal  of  the  usury  laws;  I  will  give  you  gentlemen 
a  copy  of  my  speech;  the  speech  is  as  follows:  "Gentlemen,  I 
fully  recognize  the  fact  that  in  trying  to  secure  the  adoption  of 
this  resolution  I  have  a  difficult  task  to  perform;  this  law  is 
strongly  entrenched  in  prejudice  and  sentiment,  and  it  is  a  well- 
known  fact  that  these  present  an  obstacle  difficult  to  overcome; 
I  well  remember  seeing  a  shipload  of  negroes  leaving  the  port  of 
Charleston,  bound  for  the  wilds  of  Africa,  leaving  a  country  in 
which  two  or  three  generations  of  servitude  had  made  them  fit  to 
enjoy  the  privileges  of  American  citizenship,  and  returning  to  the 
wild  and  barbarous  country  from  w^hich  they  had  come,  impelled 
alone  by  a  sentiment;  Louisiana  was  ceded  to  the  United  States 
in  1803,  and  yet  old  men  in  the  Creole  quarter  have  ,told  me  that 
neither  themselves  nor  their  fathers,  nor  their  grandfathers,  nor 
any  of  their  farnDy  had  ever  crossed  Canal  street  which  divides 
the  American  from  the  Creole  quarter;  a  large  proportion  of  the 
people  of  Nova  Scotia  have  descended  from  royalists  who  fled 
from  this  country  after  the  close  of  the  Kevoluntary  war,  and  who 
preferred  to  seek  newr  homes  in  that  cold  and  weary  land  rather 
than  dwell  where  the  stars  and  stripes  could  be  seen  waving  over 
their  heads;  indeed,  the  history  of  the  world  is  filled  with  instances 


494: 

of  great  sacrifices  made  in  order  to  gratify  a  sentiment  or  a 
prejudice;  I  will  now  address  myself  to  the  task  of  trying  to  remove 
from  your  minds  the  sentiment  in  which  this  ancient  law  finds  its 
only  support;  a  strong  prejudice  against  exacting  interest  existed 
in  early  times,  arising  from  a  mistaken  view  of  some  enactments 
of  the  Mosaic  law,  and  as  late  as  the  reign  of  Edward  VI  there 
was  a  prohibitory  act  passed  for  the  alleged  reason  that  th( 
'  charging  of  interest  was  a  vice  most  odious  and  detestable,  and 
contrary  to  the  word  of  God ; '  the  Hon.  Andrew  D.  White,  in  the 
Popular  Science  Monthly,  says  in  relation  to  the  struggle  that 
went  on  in  England  with  varying  fortune,  statesmen  on  one  side 
and  theologians  on  the  other;  we  have  seen  how  under  Henry  VIII 
interest  was  allowed  at  a  fixed  rate,  and  how  the  developmenl 
of  English  Protestantism  having  at  first  strengthened  the  ol< 
theological  view,  there  was  under  Edward  VI  a  temporary  su< 
cessful  attempt  to  forbid  usance  by  law;  the  Puritans,  dwelling 
on  old  Testament  texts,  continued  for  a  considerable  time  esp< 
ially  hostile  to  the  taking  of  any  interest;  Henry  Smith,  a  note 
preacher,  thundered  from  the  pulpit  of  St.  Clement  Danes  ii 
London  ' against  the  evasions  of  Scripture'  which  permitted 
men  to  loan  money  on  interest  at  all;  in  answer  to  the  contention 
that  only  biting  usury  was  oppressive,  Wilson,  a  noted  upholder 
of  the  strict  theological  view  in  political  economy,  declared :  'There 
is  a  difference  in  deed  between  the  bite  of  a  dogge  and  the  bite  of 
a  flea;  and  yet,  though  the  flea  doth  less  harm,  yet  the  flea  doth 
bite  after  his  kind,  yea,  and  draweth  blood,  too;  but  what  a 
world  is  this,  that  men  will  make  sin  to  be  but  a  flea-bite,  when 
they  see  God's  word  directly  against  them; '  the  same  view  found 
strong  upholders  among  contemporary  English  Catholics;  one 
of  the  most  eminent  of  these,  Nicholas  Sanders,  revived  very 
vigorously  the  use  of  an  old  scholastic  argument;  he  insisted  that 
'man  can  not  sell  tune/  that  time  is  not  a  human  possession, 
but  something  that  is  given  by  God  alone;  he  declared,  'time  was 
not  of  your  gift  to  your  neighbor,  but  of  God's  gift  to  you  both;' 
in  the  Parliament  of  the  period  we  find  strong  assertions  of  the 
old  idea,  with  constant  reference  to  Scripture  and  the  fathers; 
in  one  debate  Wilson  cited  from  Ezekiel  and  other  prophets  and 


495 


attributed  to  St.  Augustine  the  doctrine  that   'to  take  but  a  cup 
of  wine  is  usury  and  damnable; '   Fleetwood  recalled  the  law  of 
I  King  Edward  the  Confessor,  which  submitted  usurers  to  the  ordeal. 
Following  the  thoughts  suggested  by  these  quotations,  I  have  care- 
j fully  examined  every  text  of  Scripture  in  which  the  words  usury 
or  interest  occur,  and  failed  to  find  anything  therein  that  by  a 
fair  construction  would  censure  the  loaning  of  money  at  four  per 
cent,  or  six  per  cent  or  eight  per  cent,  according  to  the  class  of 
security   offered;    indeed   every   such   allusion   has  reference   to 
(benevolence  and  aid  afforded  the  poor  and  needy,  and  has  no' 
bearing  on  business  transactions  whatever;  Calvin,  the  famous 
[reformer,  was  one  of  the  first  to  expose  the  error  and  impolicy 
)f  this  view,  although  a  series  of  enactments,  known  as  the  usury 
rws,  to  some  extent  perpetuated  it  by  an  attempted  restriction 
the  maximum  rate  to  be  paid;  in  England  this  rate  was  fixed 
>y  Act  21,  James  I,  at  eight  per  cent;  during  the  commonwealth 
was  reduced  to  six  per  cent,  and  by  the  Act  12,  Anne,  c.  16, 
five  per  cent,  at  which  rate  it  stood  till  1839,  when  the  law  was 
e-pealed;  in   Scotland    any   charge  for  interest   was  prohibited 
if  ore  the  reformation;  in  1587  the  rate  was  fixed  by  law  at  ten 
cent;  in  1633  at  eight  per  cent;  in  1661  at  six  per  cent,  and  by 
act  of  Anne,  as  above  noted,  at  five  per  cent;  it  is  now 
mitted  that  the  operation  of  such  laws  tended  only  to  raise 
the  real  rate  of  interest  by  driving  men  in  distress  to  adopt 
travagant  methods  of  raising  money  —  the  bonuses  thus  paid 
?ing  really  and  in  effect  an  additon  to  the  nominal  interest;  I 
)k  upon  the  effort  to  secure  the  repeal  of  the  usury  laws  as  a 
lovement  wholly  and  only  in  the  interest  of  the  impecunious  and 
ifortunate  borrower,  a  class  to  which  I  have  never  yet  belonged 
id  trust  that  I  never  sha-11;  thus  it  will  be  seen  that  I  have  no 
to  grind  except  to  wipe  from  the  statute  books  a  law  that 
ices  them,   and  one  that  has  brought  great   hardship  to 
my  unfortunate  borrowers  in  their  hour  of  greatest  need;  it  is 
difficult  to  conceive  of  anything  more  absurd  than  the  effort 
)  fix  by  statute  the  value  of  the  use  of  money,  and  to  make  one 
lard  of  value  for  this  use  apply  to  the  various  circumstances 
ler  which  money  is  loaned;  the  value  of  the  use  of  money 


496 

depends,  first,  on  the  relation  of  the  supply  to  the  demand  — 
relation  that  is  constantly  changing  from  day  to  day  in  all  money 
centers;  second,  upon  the  class  of  collateral  offered  as  security 
for  the  loan;  while  for  the  past  ten  years  the  fluctuations  on  the 
price  of  money  have  been  very  great,  and  there  have  been  many 
times    when    borrowers    with    first-class    collateral    could    not 
secure   funds,  even   when   offering    enormous    rates   of  interest/ 
yet    there   has    not   been    a    day    in    all    that   time  when  large 
sums  could  not  have  been  secured  at  five  per  cent,  or  less,  if. 
the  borrower  had  good  rented  property  to  offer  as  security:  the 
following,  from   the  Commercial   and  Financial  Chronicle,   will 
illustrate  the  enormous  changes  in  the  rates  for  the  use  of  monew 
from  day  to  day:    'In  the  year  1890,  the  rates  for  call  loans 
several  times  reached  186  per  cent  per  annum  (that  is  the  regulajji 
six  per  cent  per  annum  with  a   commission  of  one-half  of  oim 
per  cent  day),  and  on  August  21,  1890,  that  rate  was  quoted;  tlm 
next  day  the  rate  varied  from  143  to  three  per  cent;  in  the  month 
preceding    (July)  'bankers   frequently  loaned  their  balances  ol|i 
call  at  two  per  cent,  and  the  highest  figure  for  the  month  <v;is 
nine  per  cent :  taking  the  closing  month  of  the  year  1890,  we  find] 
that  on   .December  eighth  the  quotation  for  bankers'  balances  I 
ranges  between  six  and  186  per  cent ;  in  September  and  November 
the  quotations  also  at  times  got  up  to  186  per  cent;'    I  will 
undertake  to  say  that  there  is  no  article  known  to  commerce  | 
the  value  of  which  is  so  uncertain  and  unstable  as  the  value  of  J 
the  use  of  money;  what  would  be  thought  if  the  price  of  flour 
should  open  at  six  dollars  in  the  morning,  reach  f  186  at  noon,  and 
close  at  four  dollars  at  night;  no  sensible  conservative  man  would 
ever  invest  his  capital  in  an  article  of  such  uncertain  value;  it 
may  be  said  that  these  violent  fluctuations  only  occur  in  Wall 
street,  and  do  not  affect  ordinary  mercantile  business  affair 
answer  to  this  I  would  say  that  while  all  solvent  merchants  could 
readily  dispose  of  their  paper  in  December,  1891,  at  six  per  cent 
or  less,  yet  in  December,  1890,  these  merchants  found  it  impossible 
to  realize  on  it  at  any  price,  and  in  many  instances  they  failed 
to  secure  sufficient  funds  for  their  imperative  needs,  even  when 
they  had  first- class  collateral  to  offer,  and  were  willing  to  pay  a 


497 


very  high  rate  of  interest;  it  appears  to  me  that  to  say  that  an 
article,  which  from  the  very  nature  of  -the  case  can  have  no  fixed 
value,  should  always  be  dealt  in  at  a  certain  price,  is  the  extreme 
height  of  absurdity  and  stupidity;  I  have  no  doubt  but  that 
those  who  voted  for  the  enactment  of  the  law  supposed  that  they 
did  so  in  the  interest  of  the  poorer  classes  of  borrowers,  who  had 
not  first-class  collateral  to  offer  for  their  loans;  if,  however,  we 
are  to  accept  as  a  law  in  this  State  a  decision  of  the  Court  of 
Appeals,  by  Chief  Justice  Follett,  in  the  case  of  Perkins  against 
Smith  et  al.,  a  private  banker,  as  a  person  whose  business  it  is 
to  loan  money,  can  do  so  at  any  rate  of  interest  he  chooses  and 
escape  the  penalties  of  the  law,  while  the  citizen  who  does  it 
but  once,  and  not  as  a  business,  must  lose  his  loan,  thus 
imposing  penalties  on  the  poor  man,  while  the  rich  man, 
or  professional  lender,  goes  free,  making  one  law  for  the 
rich  and  another  law  for  the  poor:  but  the  borrower  is  always  the 
servant  of  the  lender,  and  the  effect  of  the  usury  laws  has  invari- 
ably been  to  make  the  chains  of  servitude  more  galling  and 
oppressive  to  the  borrower,  and  to  place  him  more  completely  in 
the  hands  of  his  master,  the  lender,  than  he  otherwise  would 
have  been;  for  instance,  if  A  owns  a  piece  of  property  worth 
$100,000,  he  can  go  to  any  savings  bank  and  procure  a  loan  of 
|40,000  at  four  and  a  half  per  cent;  he  would  probably  have  but 
little  difficulty  in  procuring  a  second  loan  at  six  per  cent,  thus 
|  leading  him  with  a  clear  equity  of  f 40,000  in  the  property;  if 
he  needed  a  further  sum  of  f  10,000,  and  if  the  usury  laws  did  not 
scand  in  the*  way,  he  could  easily  find  some  one  who  would  loan 
him  the  money  at,  say  seven  or  eight  per  cent,  and  thus  in  ti  fair 
land  open  manner  he  could  procure  the  money  to  carry  through  his 
i enterprise;  but  here  conies  in  the  ruinous  work  of  this  absurd  law 
I  which  he  is  compelled  by  his  necessities  to  break  or  evade; 
he  makes  out  another  mortgage  to  a  third  parly  for  ^ii\!)()U  at 
,six  per  cent,  and  the  lender  gives  him  a  check  of  $10,000  for  it, 
tli us  paying  a  higher  rate  of  interest  and  paying  it  all  in 
jadvance;  this  is  no  fancy  sketch,  as  I  have  known  a  great  many 
dlar  transactions;  this  is  only  one  of  the  various  forms  by  which. 
|  the  borrower  is  not  only  compelled  to  pay  a  high  rate  of  interest 
63 


498 

but  to  pay  it  all  in  advance;  whatever  form  it  takes  the  lender 
not  only  must  be  paid  for  the  high  rate  of  interest  exacted,  bi 
mast  be  paid  also  for  the  risk  he  runs  in  violating  the  law;  I  quol 
from  the  International  Encyclopaedia:    'Interest  is  founded u] 
the  general  principle  that  capital  is  the  fruit  of  labor,  and  tl 
its  possessor  is,  therefore,  entitled  to  compensation  for  its 
A  general  denial  of  this,  by  destroying  one  of  the  most  powei 
motives  to  industry,  enterprise,  frugality    and    foresight,  w< 
without  doubt,  hinder  the  advancement   of   the   human  race 
knowledge  and  virtue,  if,  indeed,  it  did  not  give  it  a  direct  impetus 
to  wards  barbarism;  it  is  the  belief  of  the  most  intelligent  politi< 
economists  of  the  present  day  that  much  of  the  legislation  on  tl 
subject,  intended  as  it  has  been   to   protect  the  poor  from  th< 
rapacity  of  the  rich,  has,  nevertheless,  been,  in  reality,  a  mistake 
aiid  injurious  kindness,  an  attempt  to  regulate  by  law  thatwhu 
might  better  be  left  to  the  discretion  of  the  parties  directly  con-1 
cerned;  the  interests  of  capital  and  labor  are  not  conflicting  but« 
identical,  and  any  legislation  resting  upon  a  contrary  assumption* 
is  known  to  be  injurious  alike  to  both;  the  opprobrium  cast  in* 
the  name  of  Christianity  on  the  money  lender  in  the  olden  tini^a 
originated  unquestionably  in  motives  of  benevolence;  but  it  is 
now  seen  to  have  been   founded   in   igpiorance   of  the   laws   of 
political  economy;  the  money  lender  may  indeed  abuse  his  power 
to  the  injury  of  the  borrower,  as  the   borrower   may   sometimes 
deceive  the  lender,  but  this  is  only  the  abuse  of  a  thing  not  bad 
in  itself;  it  was  the  growth  of  commercial  enterprise  under  the 
influence  of  the  reformation  that  first  effectually  undermined  the 
andent  doctrine  upon  this  subject;  and  the  economist  of  the  > 
of  Locke,  Hume,  Adam  Smith  and  Benthani  did  much  to  se 
truth  in  a  clear  light;  more  and  more  the  legislation  of  the  world, 
in  respect  to  this  subject,  is  advancing  toward  an  unreserved  \ 
nition,  of  the  principle  that  the  rights  of  capital  and  labor  rest  upon 
one  and  the  same  foundation,  and  that  the  money  lender  is  not 
any  more  than  the  money  borrower  necessarily  a  wrongil<»-- 
England,  as  long  ago  as  1854,  all  laws  intended  to  pre\vu 
taking  of  a  higher  than  a  legal   rate  of   interest    \v. 
borrowers  and  lenders  being  left  free  to  make  such  agreeinei 
might  be  mutually  satisfactory,  and  it  is  a  well  known  fact  +ha,t 


499 

since  the  repeal  lower  rates  of  interest  have  prevailed  in  England 
than  anywhere  else  on  the  globe;  of  our  own  States,  Maine,  Massa- 
chusetts, Khode  Island,  Connecticut,  Colorado,  Florida,  Montana, 
Nevada,  Calif ornia,  Arizona,  Washington  and  Utah,  have  no  usury 
laws,  and  I  am  assured  that  in  the  four  New  England  States  men- 
tioned the  prevailing  rate  of  interest  is  lower  than  in  any  other 
part  of  the  Union;  there  are  twenty-five  States  where  the  usury 
laws  provide  only  for  forfeiture  of  excess  of  interest,  and  the 
remaining  States  have  laws  somewhat  similar  to  those  of  New 
York  which  work  a  forfeiture  of  both  principal  and  interest,  and 
in  some  States  even  imprisonment  of  the  usurious  lender;  of  course 
if  this  ancient  law,  which  is  being  constantly  and  necessarily 
evaded  and  broken,  is  repealed,  then  there  must  be  a  fixed  and 
definite  rate  of  interest  that  shall  be  known  as  the  legal  rate  and 
that  shall  be  binding  upon  all  parties  in  the  absence  of  a  special 
contract;  this  rate  should  be  neither  high  enough  to  oppress  the 
borrower  nor  low  enough  to  work  hardship  to  the  lender;  there 
are  vast  sums  of  money  owing  and  always  at  interest  where  from 
the  very  nature  of  the  case,  no  agreement  can  be  made  between 
the  borrower  and  the  lender;  some  of  these  are  found  in  past 
due  accounts,  estates  in  the  hand  of  an  executor  or  administrator, 
assets  of  a  debtor  in  the  hands  of  an  assignee,  a  referee  or  trustee, 
advances  on  consignments,  and  cases  pending  in  courts  where 
vast  sums  remain  unpaid  for  a  long  series  of  years;  these  are  in 
all  in  effect  forced  loans  where  the  interest  is  not  payable  semi- 
ammally,  and  where  the  lender  is  compelled  to  await  the  slow 
and  tedious  process  by  which  he  seeks  to  obtain  his  own;  it 
would  be  a  great  hardship  for  him  to  be  forced  to  accept  less 
than  a  fair  and  reasonable  rate  of  interest;  take  the  last  few 
years  as  a  basis,  with  tunes  of  great  abundance  of  money,  and 
times  of  great  scarcity;  I  will  venture  to  say  that,  outside  of 
money  loaned  on  first  mortgages  and  on  call  loans,  ninetcen- 

!  twentieths  of  all  the  loans  have  been  made  at  six  per  cent,  and 
at  this  rate  has  been  perfectly  satisfactory  to  both  borrower 
and  lender;  I  am  convinced  that  a  lower  legal  rate  would  work 

I  great  hardship  to  those  who  are  compelled  to  loan  their  money 


500 

without  their  consent,  sometimes  for  long  periods  of  years;  I  am 
well  satisfied  that  if  this  Legislature  will  repeal  the  absurd  usury 
laws,  and  will  establish  the  legal  rate  of  interest  at  six  per  cent, 
in  the  absence  of  an  agreement,  it  will  confer  a  great  benefit 
upon  the  people  of  the  State." 

I  move  the  adoption  of  the  resolution. 

The  resolution  was  adopted  with  but  one  dissenting  vote. 

In  1854  England  repealed  her  usury  laws.  At  one  time  it  was 
thought  that  to  loan  money  at  interest  was  contrary  to  the  teach- 
ings of  the  holy  scriptures;  I  say  that  I  have  carefully  and 
reverently  searched  the  holy  scriptures  with  the  best  concordance 
I  could  find,  and  have  been  a  teacher  in  a  Sunday  school  for  forty 
years,  and  I  can  find  nothing  in  any  way  bearing  on  loanii 
money;  it  all  has  reference  to  benevolence;  all  the  mention 
usury  in  the  holy  scriptures  has  relation  to  benevolence*  anc 
nothing  to  do  with  business  transactions  of  modern  times,  anc 
can  not  be  construed  to  have  any  reference  to  it  whatever,  and  tl 
best  minds  in  the  country  have  come  to  that  conclusion,  althougl 
200  years  ago  there  could  be  no  more  heinous  offense  in 
minds  of  biblical  scholars  than  loaning  money  at  all;  I  have 
got  many  of  the  best  authorities  on  the  subject;  in  one  day 
in  New  York,  according  to  the  Financial  Chronicle,  money  was 
loaned  at  four  per  cent  at  10  o'clock,  186  per  cent  at  12  o'clock 
and  six  per  cent  at  4  o'clock ;  would  any  sane  man  invest  his  money 
in  an  article  that  fluctuated  as  much  as  that;  and  all  that  time 
a  man  could  go  in  an  open  market  and  get  money  on  first  class 
collateral  at  five  per  cent,  or  from  a  savings  bank  on  mortgage 
at  four  and  a  half  any  time  that  day;  for  any  man  for  a  moment 
to  think  that  money  should  always  be  loaned  at  one  rate  of 
interest  is  absurd;  I  know  a  woman  that  was  left  f 4,000,  all  she 
had  when  her  husband  died,  which  she  loaned  to  some  person  at 
seven  per  cent;  she  did  not  know  anything  about  this  usury  law; 
she  loaned  it  at  seven  per  cent  on  the  face  of  the  instrument;  he 
took  advantage  of  it  and  she  lost  it  all ;  the  simple  solution  of  this 
interest  question  is  right  here;  draw  a  paper  so  as  to  say:  "  Section 
1  of  title  3  is  hereby  amended  so  as  to  read  as  follows:  Where 


501 

there  is  no  agreement  for  a  different  rate  of  interest,  interest  on 
money  shall  be  at  the  rate  of  six  per  cent;  it  shall  be  lawful  to 
pay  a  higher  rate,  but  no  greater  rate  than  that  above  nientionod 
unless  the  agreement  to  pay  such  greater  rate  is  in  writing;  all 
acts  or  parts  of  acts  inconsistent  with  the  provisions  of  this  act  are 
hereby  repealed ;  "  simply  pass  a  little  act  like  that  and  the  whole 
question  is  settled  forever;  sixteen  States  in  the  United  States  have 
repealed  those  laws,  some  as  long  as  thirty  years  ago,  and  Rhode 
Island  was  the  first  to  do  it;  money  is  as  free  as  any  merchandise, 
and  I  am  told  by  brokers  that  the  city  of  Providence  is  the  cheapest 
money  town  in  the  United  States;  we  all  know  that  England 
repealed  her  usury  laws  in  1854,  and  her  money  markets  have 
always  been  the  cheapest;  I  was  not  aware  that  Khode  Island 
was  the  cheapest  until  a  little  while  ago;  a  gentleman  stated  to 
.me  that  the  city  of  Providence  has  cheaper  rates  than  any  other 
city  in  the  United  States;  I  wish  you  would  read  this;  I  have 
no  personal  interest  in  it;  I  can  borrow  money  to-day  at  much  less 
than  the  interest  quoted,  right  in  Wall  street,  for  any  amount;  I 
never  paid  a  usurious  rate  of  interest;  I  am  a  considerable  bor- 
rower, not  lender;  I  never  made  a  dollar  in  my  life  of  anybody;  it 
is  entirely  in  the  interest  of  the  unfortunate  and  impecunious 
borrower,  who  has  got  poor  collateral  or  poor  credit;  it  works 
untold  mischief  and  injury  to  the  unfortunate  borrower;  upon 
this  corporation  law  I  should  like  to  say  a  few  words;  I  have  an 
extract  from  a  paper  in  my  hand  which  says :  "  The  organization 
of  a  somewhat  novel  corporation  was  completed  last  evening  in 
Jersey  City,  by  Dill,  Chandler  &  Seymour,  lawyers,  of  No.  31 
Nassau  street,  this  city.  It  will  be  known  as  the  Corporation 
Trust  Company  of  New  Jersey,  and  it  has  a  capital  of  $100,000, 
which  will  soon  be  increased  to  f  1,000,000.  Its  present  offices  will 
be  at  the  corner  of  Greene  and  Grand  streets,  Jersey  City. 

"  The  object  of  the  new  corporation  is  to  some  extent  apparent 
by  its  name;  it  will  in  effect  be  the  trustee  of  corporations  organ- 
ized under  the  laws  of  New  Jersey,  but  really  doing  business 
outside  of  that  State,  its  organization  having  been  brought  about 
on  account  of  the  existence  of  great  numbers  of  such  corporations; 
the  new  company  will  act  as  the  local  agent  for,  and,  to  a  cer- 


502 


tain  extent,  as  a  trustee  of  trusts,  furnishing  an  office  for  all 
such  corporations  and  acting  as  register  and  guarantee  of  their 
stock  debenture,  and  doing  a  general  trust  company's  busint 
the  new  directors  of  the  Corporation  Trust  Company  of  N( 
Jersey  are:  Gov.  Leon  Abbett;  Charles  Kelsey,  Secretary  of  State; 
Allan  McDermott,  chairman  of  the  Democratic  state  committee; 
Henry  S.  White,  United  States  District  Attorney;  Jo] 
McAnerney,  president  of  the  Seventh  National  Bank  of  this 
James  B.  Dill,  Charles  King,  Vincent  H.  Lamarche  of  Brookl^ 
and  T.  N.  Jordan,  comptroller  of  the  Equitable  Life  Assurance 
Society;  the  president  of  the  company  is  Mr.  McDermott,  the  vice- 
president  is  Mr.  White,  the  treasurer  is  Mr.  McAnerney,  and  the 
secretary  is  Mr.  Lamarche;  besides  the  directors  there  are  six 
other  men  of  almost  equal  prominence  politically  who  are  stocl 
holders,  but  their  names  will  not  be  made  public  for  the  presenl 
in  order  to  provide  offices  for  companies  the  new  corporatio] 
pending  the  erection  of  a  building  for  its  own  especial  use,  h; 
hired  the  premises  at  the  corner  of  Greene  and  Grand  streel 
Jersey  City,  and  fitted  up  offices  with  all  the  necessary  coi 
veniences;  such  corporations  organized  under  the  laws  of 
State  of  New  Jersey,  and  doing  business  out  of  the  State,  wi 
thus  be  able  to  comply  with  the  law  of  that  State,  which  requii 
all  such  corporations  to  have  an  office,  and  to  have  a  person  in 
charge  of  it  during  the  business  hours  of  the  day;  in  this  building, 
facilities  are  offered  to  corporations  to  hold  their  meetings,  elec- 
tions, etc.,  and  to  transact  all  their  business  which  the  law 
requires  them  to  transact  within  the  State  of  New  Jersey;  there 
are  deposit  vaults  in  the  building  in  which  each  company  can 
have  a  separate  safe  to  keep  its  documents;  the  corporation,  by 
its  charter,  has  power  to  act  as  agent  for  non-resident  corpora- 
tions, and  to  be  designated  as  the  person  upon  whom  tbe 
service  of  papers  within  the  State  of  New  Jersey  shall  be 
made;  it  is  expected  that  the  new  company  will  also  do  an 
extensive  business  in  guaranteeing  the  regularity  and  legality 
of  the  issue  of  stocks,  mortgages  and  bonds  of  New  Jersey  cor- 
porations, and  will  stand  in  the  same  relation  to  these  securities 
as  the  various  title  guarantee  companies  do  to  the  purchasers 


503 

of  real  estate;  tlit-  courts  of  several  States,  including  the 
State  of  New  York,  have  decided  that  New  Jersey  corporations 
which  do  not  strictly  comply  with  the  law  that  requires  them  to 
have  an  office  and  an  agent  in  New  Jersey  continuously  are  not 
shielded  by  their  charter,  and  that  the  stockholders  and  officers 
of  such  companies  are  copartners,  and  liable  for  the  debts  thereof; 
the  extent  of  the  field  open  to  the  new  company  is  also  shown 
by  the  figures  published  some  months  ago  in  the  Evening  Post 
in  relation  to  the  great  number  of  corporations  which  are  organized 
under  the  laws  of  New  Jersey,  but  which  really  do  their  business 
in  this  city;  in  two  years  alone,  for  which  the  statistics  were 
obtained,  1,(?26  such  companies,  with  a  capital  stock  of  $600,000,000 
were  organized  under  the  laws  of  New  Jersey;  in  explaining  the 
object  and  purposes  of  the  new  corporation  organized  yesterday, 
one  of  the  directors,  alluding  to  the  decision  of  the  courts  above 
referred  to,  said:  "This  corporation  will  enable  those  corporations 
to  meet  that  criticism  in  two  ways;  in  the  first  place,  in  the  very 
strictest  sense,  it  will  enable  such  companies  to  comply  with  the 
laws  of  the  State  of  New  Jersey,  as  to  having  a  local  office,  and 
iii  the  second  place,  it  will  financially  guarantee  the  legality  aud 
non-liability  of  the  stock;  the  company  proposes  to  take  such  a 
stand  that  their  guarantee  of  the  legality  and  non-liability  of 
the  stock  and  debentures  shall  be  as  necessary  to  parties  seeking 
to  borrow  money  on  such  collateral  as  is  the  certificate  of  a  title 
guarantee  company  as  to  the  title  to  a  piece  of  real  estate,  in 
case  a  borrower  wants  to  realize  upon  it;  there  is  likely  to  be 
some  legislation  in  New  Jersey  the  coming  winter  more  strictly 
enforcing  the  rule  that  corporations  must  maintain  continuously 
an  office  in  the  State  of  New  Jersey  and  have  as  well  a  person 
designated  upon  whom  service  of  papers  can  be  made  within 
the  State;  all  companies  such  as  those  referred  to  will  therefore, 
undoubtedly,  find  it  to  their  advantage  to  rent  offices  in  the  build- 
ing of  our  company  and  take  advantage  of  all  the  facilities 
afforded  by  it;  the  most  profitable  part  of  the  business  of  our 
company,  however,  will  probably  be  in  guaranteeing  the  stocks 
of  these  foreign  corporations,  rather  than  in  renting  offices  to 
them  and  providing  them  with  a  legal  representative  upon  whom 


504 

papers  may  be  served,  so  that  they  may  keep  within  the  law  of  the 
State  and  the  terms  of  their  charters." 

The  New  York  counsel  to  the  new  company  are  Dill,  Chandler 
and  Seymour,  and  Mr.  White  will  be  its  counsel  in  New  Jersey. 

Q.  Those  corporations  organized  there  do  business  in  this  State; 
they  have  their  money  here?  A.  Yes,  sir;  they  are  taxed  here, 
and  some  of  them  are  mighty  sorry  they  ever  organized. 

Q.  They  pay  taxes  over  there?  A.  Yes,  sir;  and  they  pay  them 
hero  —  in  both  places ;  now,  here  is  another  little  paragraph  I  cut 
out  of  a  paper:  "Reginald  P.  Kowe  was  yesterday  appointed 
receiver  of  the  National  Lead  and  Oil  Company  by  Judge  Landon, 
in  the  Supreme  Court,  Brooklyn.  The  appointment  was  made 
the  request  of  Elihu  Boot,  who  appeared  for  the  board  of  directoi 
in  a  petition  for  a  voluntary  dissolution.  This  petition  w< 
signed  by  Reginald  P.  Rowe,  vice-president,  W.  P.  Thompsoi 
R  C.  Webster,  J.  G.  Steenken  and  John  L.  Steen.  It  was  statt 
tha  t  the  corporation  wras  entirely  solvent,  but  that  the  stockholders 
desired  to  organize  under  the  laws  of  New  Jersey."  I  am  not 
very  familiar  with  that  company,  but  it  shows  that  our  corporations 
are  being  driven  away;  I  am  at  the  head  of  a  concern  where  li 
have  a  partner  of  about  my  own  age;  we  are  no  longer  young;  we 
wont  remain  on  the  stage  of  life  a  great  while  longer,  but  I  hope  to 
live  quite  a  while  yet;  I  have  had  a  pretty  good  time  for  sixty 
years,  but  we  can  not  reasonably  expect  to  live  a  great  while;  we 
have  sons  in  business;  I  thought  of  incorporating;  I  went 
to  the  head  of  a  corporation  that  was  formed  under  the  laws 
of  New  Jersey  three  years  ago  and  stated  our  position;  he  says: 
"  You  haAre  got  a  pretty  good  right  to  live  five  or  ten  years  yet; 
I  will  giA'e  you  the  advantage  of  my  experience;  keep  on  as  you 
are;  it  is  altogether  probable  that  the  merchants  will  induce  our 
Legislature  to  adopt  liberal  measures  towards  corporations,  and 
the  time  will  come  when  you  can  organize  as  you  should  be 
organized;"  I  made  up  my  mind  that  I  would  take  his  advice, 
and  having  had  experience  in  the  red  tape,  and  cost  and  expense 
and  bother,  and  I  said:  "I  will  have  a  chance  of  living  five  or  ten 
years,  and  will  hope  the  Legislature  will  give  us  more  favorable 
laws:"  I  have  been  studying  ihe  question  of  taxation  from  the 


505 

>ks;  1  have  read  several  books  lately,  and  I  have  come  to  this 
mclusion,  that  there  is  but  one  thing-  to  be  taxed,  and  that  is 
>al  estate,  when  you  tax  real  estate  you  tax  everything  else, 
id  that  is  all  there  is  about  it,  and  you  can  not  reach  anything 
all  the  statistics  of  all  the  States  and  their  efforts  to  reach 
>perty  prove  it,  and  when  a  little  child  goes  into  a  candy  store 
buys  a  penny's  worth  of  candy,  he  helps  to  pay  the  tax,  and 
''hen  a  millionaire  buys  a  $2,000  carriage,  he  pays  a  tax  exactly 
the  same  proportion  to  his  wealth;  when  the  lodger  in  a  ten- 
ant lodging  place  comes  and  pays  ten  cents,  he  helps  to  pay  the 
x,  and  when  a  man  pays  twenty-five  dollars  for  a  suite  of  rooms 
a  hotel,  he  pays  a  tax. 

Q.  Then  yon  really  believe  that  personal  taxation  drives  capital 
of  the  State?    A.  There  were  1,600  corporations  driven  out 
lere  in  two  years. 

By  Mr.  Malby. 

Q.  Do  you  think  it  would  keep  them  in  if  foreign  corporations 
rere  taxed?     A.  I  would  not   tax  any   corporations;    I  would 
iply  tax  real  estate;  T  might  have  a  small  tax  for  incorporation 
t  would  not  be  objectionable. 
Q.  They  haA'e  that  in  New  Jersey?    A.  Yes,  sir;  and  I  think 
small  tax  for  organization  would  bring  those  1.600  companies 
ick.  and  would  return  more  income  than  v/ould.the  personal 
returns  now;  this  is  the  Empire  State;  all  that  makes  it 
10  Empire  State  is  our  p-eat  harbor,  our  Hudson  river,  and  the 
;  nothing  else  on  earth  makes  it  the  Empire  State;  New 
rork  city  to-day  pays  over  1,000,000  towards  the  support  of  the 
lools;  it  could  not  pay  a  cent  of  it  if  it  was  not  a  great  com- 

nal  port. 

,Q.  What  is  your  idea  of  the  inheritance  tax?     A.  I  think,  if 
are  very  large,  it  would  be  a  good  thing;  it  seems  to  me  that 
in  or  twenty  millions  is  enough  for  anybody;  but  it  don't  seem  to 
J  that  when  a  man  dies  and  leaves  ten  or  twenty,  or  even  $100,000, 
a  large  family  that  are  expensive,  that  the  tax  gatherer 
ild  gather  it  in;  he  is  the  bread  winner,  and  he  is  gone;  on 
i  ates  of  1,000,000  and  up,  I  say  it  is  all  right  enough, 
64      • 


506 

because  it  don't  make  much  difference  whether  a  man  is  wortij 
1,000,000  or  10.000.000;  there  is  no  difference;  but  those  smal 
estates,  I  think  it  is  an  act  of  cruelty;  with,  collateral  relation 
it  might  be  different,  but  my  own  children  —  what  T  have  be« 
able  to  save  for  them;  I  think  it  is  a  cruel  act,  because  there  wa 
not  be  enough  to  take  care  of  them  in  the  way  they  have 
accustomed  to  live;  it  depends  upon  how  much  I  leave  al 
that,  or  how  long  I  live  and  how  successful  I  might  be. 

William  H.  Parsons  recalled: 
By  Mr.  Ains worth. 

Q.  You  stated  that  stockholders  under  our  laws  were  Half 
for  the  entire  indebtedness,  regardless  of  the  amount  of  stock: 
that  would  be  true  if  you  conducted  your  business  as  partneif 
A.  Yes,  sir. 

Q.  Why  do  you  urge  the  change  when  you  do  the  same  business 
by  the  same  men  under  the  form  of  a  corporation?  A.  Like  mj 
friend,  Mr.  Smith,  I  am  not  as  3roung  as  I  once  was;  I  wantB 
leave  my  capital  in  my  business;  I  want  to  perpetuate  that  busi 
ness,  but  if  I  have  a  private  estate  outside  of  my  business,  I  d< 
not  want  to  make  that  necessarily  responsible. 

Q.  But  if  you  had  conducted  that  business  as  partners  yot 
would  have  made  that  responsible?  A.  I  would  have  probabl; 
gone  out  of  business. 

Q.  \Tou  get  a  greater  advantage  than  you  would  doing  busine&j 
as  partners;  is  it  not  equitable  that  you  should  pay  the  Stat'j 
something  for  that  advantage?  A.  I  am  perfectly  willing  t< 
pay  the  State,  and  I  think  it  is  perfectly  equitable  that  the  Stat 
should  be  paid  on  the  same  basis  I  would  have  paid  it'  I  lia- 
continued  the  individual  firm. 

Q.  But  you  get  greater  advantage,  don't  you?     A.  Personal! 
I  do  not. 

Q.  Then  there  is  no  object  to  incorporate?     A.  Perhaps  thos 
that  succeed  me  may  get  the  advantage. 

Q.  You  do  it  because  you  think  there  is  an  exemption  ti 
private  estate  from  the  liability  which  you  incur  as  a  corporation 
now,  if  the  State  gives  ypn  that  advantage,  which  you  won! 


507 


lossess  as  a  private  individual,  is  it  equitable  for  the  State  to 
ilax  you  for  that  which  it  gives  you?  A.  If  I  had  not  had  in  mind 
|jen  years  ago  the  idea  that  at  a  period  in  my  life  I  would  put  my 
lusiness  in  a  corporation  it  would  not  be  one-fourth  its  magnitude 
•>-day;  I  should  have  ten  years  ago  commenced  to  curtail  my 
Business,  rather  than  commence  largely  to  increase  it. 

I  G.  Waldo  Smith,  recalled: 

I  The  witness. —  In  order  that  a  solvent  concern  should  be  will- 
lig  to  pay  the  State  for  exemption  from  liability,  would  infer  that 
I  man  has  not  much  confidence  in  his  business,  and  it  seems  to 
me  that  would  not  be  a  proper  motive,  and  the  State  should  not 
jfcact  remuneration  for  that. 

I  Q.  I  was  not  questioning  the  motive  ?  A.  It  seems  to  me  a  very 
Improper  motive  for  the  State  to  exact  money  for;  this  gentle- 
ilan  I  spoke  of  took  a  paper  out  of  his  pocket  and  says:  "Here, 
latil  I  formed  this  corporation,  myself  and  partner  paid  a  per- 
»nal  tax  on  $15,000;  now  I  am  assessed  at  a  million  dollars;  it 
I  now  $19,000  whereas  the  tax  before  was  $600;  I  have  offered 
jf  pay  on  half  a  million  as  a  compromise;  don't  you  form  any  cor- 
ttration  this  year  until  after  the  Legislature  meets;"  I  have 
•I  resolution  passed  by  the  New  York  State  board  of  trade  when 
renty-eight  bodies  from  the  interior  cities  of  the  State  were 

isented;  it  is  very  short  and  I  will  read  it: 
"Whereas,  The  present  laws  of  New  York  State  governing  the 
ition  of  business  corporations   are  so   extensive,  technical 
onerous,  when  compared  with  those  of  adjoining  States,  as  to 
ive  our  citizens  to  those  States  to  transact  their  business,  with 
j consequent  loss  of  revenue  to  this  State;  and 
"Whereas,  During  1890  over  500,000,000  was  forced  out  of  New 
•k  and  reorganized  in  New  Jersey  and  other  States  by  the 

laws  of  this  State;  therefore, 

Kesolved,  That  the  Legislature  be  requested  to  correct  the  pres- 
unjust  statutes  governing  the  formation  of  business  corpora- 
in  order  that  the  laws  of  a  great  commercial  State  like  New 
should  offer,  at  least,  as  favorable  opportunities  for  the 
•ative  employment  of  capital  as  those  our  sister  States  offer, 
we  commend  this  subject  to  the  consideration  of  our  public 


508 

authorities  and  the  Legislature  with  a  view  to  their  niod'ii- 
cation." 

I  have  a  resolution  offered  by  the  chamber  of  commerce,  of 
which  1  am  a  member;  it  is  as  follows;  it  was  adopted  January  7, 
1892: 

"Whereas,  The  present  laws  of  New  York  State  governing  tm 
formation  of  business  corporations  are  so  extensive,  technical  ail 
onerous,  when  compared  with  those  of  adjoining  States,  as  1 
drive  our  citizens  to  those  States  to  transact  their  business,  with 
a  consequent  loss  of  revenue  to  this  State; 

Besolved,  That  the  laws  of  a  great  commercial  State  like  N M 
York  should  offer  at  least  as  favorable  opportunities  for  the 
co-operative  employment  of  capital  as  those  our  sister  Stall 
offer,  and  we  commend  this  subject  to  the  consideration  of  ow 
public  authorities  and  the  Legislature  with  a  view  to  their  modifi- 
cation. 

Eesolved,  That  the  co-operation  of  other  commercial  bodies  am] 
particularly  that  of  the  New  York  State  board  of  trade,  is  hereby 
solicited  to  accomplish  this  desired  end." 

Our  secretary  sent  a  copy  of  that  to  Mr.  Farquhar. 

W.  H.  Arnoux,  called  as  a  witness,  being  duly  sworn,  testified 
as  follows: 

By  Mr.  Hamilton. 

Q.  You  are  a  resident  of  the  city  of  New  York?    A.  Yes,  sir. 

Q.  A  practicing  lawyer?  A.  Yes,  sir;  and  have  been  for  fort;i 
years. 

Q.  Also  a  member  of  the  New  York  board  of  trade  and  trans 
portation,?  A.  Yes,  sir. 

Q.  And  attending  here  as  a  member  of  the  committee  sen 
to  appear  before  this  committee?  A.  I  was  requested  to  com 
by  the  other  members;  I  was  not  originally  appointed  with  tha 
view. 

Q.  In  your  practice  you  have  had  considerable  opportunity  o 
examining  the  present  tax  laws?  A.  I  have. 

Q.  'Their  enforcement  arid  the  various  criticisms  made  upo 
them  ?  A.  Yes,  sir. 


509 


Q.  Your  firm  is  also  very  largely  interested  in  the  loaning  of 
loney  on  mortgage?    A.  Very  largely. 

Q.  About  what  amount  annually,  would  you  say?  A.  There 
tve  been  passing  through  our  hands  very  nearly  a  million  dollars 
month;  I  think  about  f  10,000,000  a  year,  and  we  have  to  examine 
Itles  for  the  loaning  of  money,  on  sometimes  as  high  as  f  2,000,000 
month. 

Q.  What  have  you  to  say  as  to  the  propriety  of  modifying  the 
»nt  laws  relating  to  taxation,  assessment  and  interest  as  they 
feet  the  agricultural,  manufacturing,  commercial,  laboring,  bank- 
and  other  interests  of  the  State?    A.  In  my  judgment,  from 
ly  experience  in  my  profession  and  intercourse  with  business 
ten,  I  think,  that  the  taxation  of  personal  property  in  the  hands 
individuals,  is  unjust,  oppressive  and  tends  to  defeat  the  object 
which  it  is  intended;  I  think  it  should  be  the  duty  of  every 
iture  to  seek  to  make  the  laws  just,  equal  and  enforceable; 
this  State  the  taxes  on  personal  property  have  never  been 
Lected  in  a  way  to  do  justice  to  the  community,  and  in  my 
tent,  the  law  should  be  abolished;  contrary  to  the  opinions 
some  of  the  others  who  have  spoken  to  you,  I  think  that  the 
islature  has  adopted  the  wisest  course  that  could  be  suggested 
its  taxes  on  corporate  franchise  and  its  taxes  on  collateral 
ieritance,  for  those  taxes  can  always  be  collected;  in  my  judg- 
it,  looking  at  it  as  a  matter  of  business  experience,  I  think  an 
>r  is  committed  in  the  State  in  making  the  tax  too  large  on 
orations;    we    are    constantly    incorporating,    gentlemen,    in 
>us  forms  of  enterprise,  and,  I  think,  in  the  last  three  years 
o  has  never  been  one  that  had  a  choice  of  incorporation  that 
not  incorporate  in  another  State  than  the  State  of  New  York; 
st  Virginia,  I  believe,  is  the  most  favorable,  because  West 
inia,  while  it  imposes  a  tax  for  incorporation,  which  is  much 
rev  than  the  State  of  New  York,  permits  the  holding  of  the 
lual  meeting  and  the  meeting  of  the  board  of  directors  outside 
the  State  of  West  Virginia;  New  Jersey  requires  that  the 
mal  meeting  of  the  stockholders  shall  be  held  in  the  State  of 
Jersey,   and   consequently,   the  annual  meetings  are  held 
ly  at  Taylor's  hotel,  Jersey  City;  by  this  means  New  Jersey 


510 

collects  a  revenue  of  considerable  amount  from  business  conducted 
wholly  and  entirely  in  the  State  of  New  York,  and  New  York  lose* 
it;  what  is  the  best  course  to  pursue;  the  tax  itself  is  a  wise 
one  in  my  opinion;  the  same  is  true  in  regard  to  the  collateitj 
inheritance  tax,  and  I  think  it  was  wisely  extended  to  make  it  1 
succession  tax;  the  amount  is  not  large  —  one  per  cent  as  the  1*« 
stands,  and  if  that  law  could  be  recast  —  because  in  its  present 
form  it  has  been  condemned  by  the  Court  of  Appeals  as  a  very 
intricate  and  hardly  comprehendable  law,  but  they  have  laid  down 
rules  for  the  assessors  and  the  surrogates;  there  is  a  tax  which, 
in  my  judgment,  is  a  model  one;  no  one  can  escape  it;  it  is  pro 
vided  that  every  executor  is  personally  liable  for  that  tax,  and 
therefore  if  he  permits  an  estate  to  escape  he  himself  become* 
personally  liable,  and  as  long  as  the  property  is  in  the  State  it  if 
subject  to  the  tax  and  is  enforced  and  collected. 


By  Mr.  Coggeshall. 

Q.  What  do  you  think  that  to  the  direct  inheritance  tax? 
That  it  is  a  fair  and  just  tax;  I  think  that  for  the  protection  that 
the  State  gives  every  man's  property  and  every  man's  family,  it  ha«j 
a  right  to  say  it  shall  be  paid;  I  had  an  occasion  to  argue  tin  I 
question  in  the  Court  of  Appeals  in  the  Prime  case,  a  case  whicl| 
has  just  been  decided;   I  find  that  tax  first  imposed  in  Kom<| 
by  Augustus,  and  Gibbon  in  his  history  of  Rome  called  England'! 
attention  to  it,  and  in  the  latter  part  of   the  last  century,  Low' 
North,  then  the  prime  minister,  brought  in  a  bill  under  which  tha: 
tax  had  been  collected  in  some  form  to  the  present  day;  it  is  knowi 
as  the  succession  tax,  I  think,  in   England;  they  tax  as  we  d< 
to-day,  the  collateral  as  well  as  the  direct;  the  third  tax,  I  think] 
is  an  excise  tax  in  some  form;  I  think  that  is  a  just  tax;  I  thinl 
in  those  three  forms  the  State  of  New  York  should  collect  all  o 
the  personal  t&xes  which  it  expects  to  collect;  I  had  occasion  nin 
years  ago  to  make  a  study  into  this  matter,  and  I  then  found  b, 
research  that   the   personal   taxes   in   New   York   amounted   1 
1197,000,000;  in  Brooklyn  to  f  13,000,000 ;  in  Buffalo  to  $10,000,00( 
making  a  total   of   1221,000,000,   and  in  the  rest  of   the  Stat 
$03,000,000,  and  by  the  previous  census  of  1880  the  capital  of  th 


511 


II ate  of  New  York  alone  amounted  in  value  to  $108,000,000  more 
in  the  entire  personal  property  as  taxed  in  the  county  outside 
the  three  that  I  have  mentioned,  and  in  that  investigation  I  made 
discovery ;  in  one  county,  I  think  it  was,  or  perhaps  it  may  have 
-en  one  township  —  one  district,  whatever  it  was  —  there  were 
vo  individuals  only  who  were  taxed  for  personal  property  and  one 
vas  a  widow  and  the  other  was  an  executor;  in  another  county  in 
ic  State  I  found  that  by  the  census  "of  1880  the  poultry  in  the 
nmty  was  worth  more  than  all  the  assessed  personal  property; 
>w,  when  a  law  is  enforced  like  that  it  is  wise  to  abolish  it;  f  am 
believer  in  a  single  tax;  that  is,  with  the  exception  of  those  three 
vhere  you  get  personal  property  that  there  is  no  escape  from,  and 
[vhere  it  is  uniform,  universal  and  equitable;  for  all  the  rest  I 
relieve  that  you  should  tax  real  estate,  because  it  comes  from  the 
msumer  eventually  exactly  as  does  the  tariff  of  the  United  States ; 
ie  merchant  who  imports  the  groods  don't  pay  it  out  of  his  pocket ; 
is  the  consumer  who  pays  the  tax,  and  so  it  is  in  regard  to  all 
il  estate  taxes. 

By  the  Chairman. 

Q.  You  are  quite  satisfied  that  the  foreigner  does  not  pay  the 
;  it  has  been  asserted  that   the   foreigner  pays  the  tax?    A. 
lere  are  certain  taxes  that  the  foreigner  certainly  does  share; 
am  looking  at  it  as  a  home  question;    whatever  tax  is  paid 
eventually    paid    by  labor,    and  it  comes  to   that  in   every 
stance,  and  must  eventually  reach  it,  and  if  you  tax  the  real 
•ty  nobody  escapes;  everybody  pays  his  just  proportion  of 
ie  tax,  and  that  I  think  ought  to  be  the  real   question   for  the 
legislature  to  investigate  —  how  they  can  impose  the  tax  so  that 
shall  bear  equally,  universally  and  justly  upon  all  citizens,  and 
it  put  the  burden  upon  one  and  another  escape;  now  in  regard 
the  personal  tax;  there  is  another  consideration;  in  the  State 
York  figures  show  that  for   the   last  three  years  on  the 
re  it  has  cost  seven  and  a  half  per  cent  to  collect  the  personal 
in  one  of  the  years  it  cost  ten  per  cent,  and  I  think  that  does 
represent  the  entire  cost  of  its  collection;  the  real  estate 
in  the  aggregate,  of  course,  costs  more,  but  when  you  come  to 


512 

distribute  it,  I  think,  you  will  find  that  it  is  much  less,  and  when 
you  abolish  all  the  machinery  of  personal  taxation  in  the  Stat<^~ 
and  deliver  the  State  from  so  many  tax  gatherers,  the  savings  of 
the  State  would  make  another  item  which  would  amount  to  a 
great  deal. 

By  Mr.  Coggeshall. 

Q.  Would  the  effect  of  levying  the  taxes  upon  the  real  esta« 
alone,  except  in  those  three  instances  that  you  have  mentioned^ 
be  to  increase. or  decrease  the  tax  upon  real  estate?  A.  Perhaps 
in  the  beginning  it  might  increase  it  a  little,  but  the  benefit  ^o 
the  real  estate  would  be,  I  think,  much  larger  than  the  cost  wouiB 
be;  in  this  way,  if  it  were  known  to  the  world  at  large  that  a 
man  could  bring  any  amount  of  personal  property  into  this  State,*; 
money,  bonds,  or  any  other  form,  was  absolutely  free  from  tad 
it  would  increase  loanable  funds  of  the  State  to  such  an  exteiM 
that  the  diminution  of  interest  would  far  more  than  equal  the 
amount  of  tax  that  would  be  added. 

By  Mr.  Ainsworth. 

Q.  How  would  that  affect  the  farmer;  he  could  not  raise 
added  bushel  of  wheat  or  potatoes?  A.  I  think  the  amount 
would  pay  would  be  a  very  trifling  addition;  but,  of  course,  if  • 
man  owns  nothing  except  real  estate  and  has  no  debts  whatever  i 
and  no  desire  to  borrow  any  money,  it  might  add  to  his  burden;; 
of  course,  it  must  in  some  respects  or  in  some  direction  add  a| 
burden  to  some;  you  can  not  get  an  increased  tax:  in  one  direction; 
without  imposing  an  additional  amount  on  some;  I  am  speaking,! 
of  course,  of  the  general  community;  the  community  at  large,! 
in  my  judgment,  who  pay  taxes,  would  pay  less  money  in  the' 
course  of  a  year  in  paying  all  the  tax  upon  real  property. 

By  Mv.  Coggeshall. 
Q.  How  much  is  the  aggregate  amount,  or  about,  of  taxes  paid 
upon  personal  property,  aside  from  those  three  that  you  speal 
of;  that  is,  the  excise,  inheritance  law  and  the  corporation 
A.  I  have  never  been  able  to  get  at  the  figures;  I  suggest  thai 
the  committee  might  wisely  endeavor  to  ascertain  what  was 


513 

I  total  amount  and  what  was  the  total  cost  of  its  collection;  your 
I  committee  has  the  power  to  ascertain  that;  a  private  individual 
1  would  find  it  very  difficult  to  go  through  sixty  times  and  do  it. 

Q.  As  to  trust  companies,  so  called;  that  is,  companies  organ- 
ized by  special  act  doing  business  as  trust  companies;  do  they 
pay  taxes  or  not?    A.  I  am  not  positive  about  1hat;  my  recollec- 
tion is  that  the  trust  companies  do  not  pay  taxes;  I  know  that 
|is  the  case  in  regard  to  the  savings  banks;  for  instance,  the 
imotint  that  a  savings  bank  will  take  without  the  reduction  of 
;heir  interest,  it  is  cheaper  for  a  man  to  put  a  thousand  dollars 
In  a  savings  bank  and  take  four  per  cent  than  it  would  be  for 
urn  to  invest  that  amount  in  bond  and  mortgage  and  pay  taxes, 
'hich  he  wouJd  have  to  pay. 

Q.  Most  of  the  bonds  and  mortgages  escape  taxation?    A.  I 
think  they  do;  because  there  comes  the  thing  right  before  every- 
me' s  mind ;  it  I,  as  a  private  individual,  put  out  f  100,000  on  bond 
id  mortgage  and  get  four  and  a  half  or  five  per  cent,  and  I  am 
liable  to  be  taxed  two  per  cent  on  my  |100,000,  my  income  is 
H!  need    to   three   per 'cent  or  less;   if  I  put  that  money  in  the 
ivings  bi-nk,  they  can  make  the  same  loans  and  do  not  pay  a 
it. 
Q.  I  spoke  of  trust  companies?     A.  I  think  they  stand  in  the 

position  as  savings  banks;  I  am  not  positive. 
Q.  They  are  made  largely  of  individuals  who  organize  thein- 
jlves  as  trust  companies?     A.  Yes,  sir. 

Q.  And  they  do  a  general  business,  do  they  not;  a  good  many 
jf  them?  A.  In  one  respect  they  do  not;  in  another  they  do; 
ike  the  United  States  Trust  Company;  they  will  not  receive 
['hat  they  call  "open  accounts;'-  that  is,  account  that  you  can 
leposit  your  money  and  draw  it  out  from  day  to  day,  and  be 
[pedited  with  interest  on  your  balance;  the  Union  Trust  Company 
ill. 

BQ.  They  loan  a  good  deal?     A.  Certainly  they  do. 
j]Q.  And  they  do  a  general  banking  business  except  that  they 
J>  not  receive  deposits?    A.  They  do  not  receive  them  to  be 

against  the  way  a  bank  does. 
They  pay  no  taxes?    A.  I  think  not. 


514 

By   Mr.   Ah  earn. 

Q.  There  is  no  reason  in  the  world  why  they  should  not?  A.  I 
think  it  would  be  most  unfortunate  to  impose  a  tax  upon  them 
because  it  would  immediately  drive  millions  —  I  think.it  would 
be  safe  to  says  hundreds  of  millions  of  capital  out  of  the  State, 
if  the  trust  companies  had  to  pay  taxes  upon  their  loanable  fund«j 
as  a  private  individual  those  funds  would  not  be  deposited  with; 
them. 

Q.  One  of  the  differences  between  a  trust  company  and  a  bank: 
is  that  the  trust  company  pays  interest  on  the  deposit?  A.  ThalJ 
is  one  01'  the  main  differences,  and  that  grows  out  of  the  facij 
that;  they  have  a  certainty  that  the  funds  are  going  to  remain 
a  certain  time,  and  therefore  they  can  pay  interest  where 
banks  can  not. 

Q.  Is  that  in  your  judgment  the  principle  upon  which  they 
exempted   from   taxation?    A.  I   think  so;   an  account   agai] 
which  you  check  from  day  to  day  is  technically  known  as 
active  account,  and  such  accounts,  as  far  as  I  am  aware, 
Union  Trust  Company  is  the  only  one  that  takes. 

By  Mr.  Coggeshall. 

Q.  You  spoke  of  the  corporation  tax  being  reduced;  have 
any  suggestion  to  make  to  the  committee  as  to  how  much  and 
in  what  way  it  would  be  proper  to  modify  them?  A.  I  could 
not  offhand  say  that,  although  I  have  had  occasion  to  look  into 
the  law  in  New  Jersey  to  see  how  much  they  paid,  but  I  have 
forgotten  what  it  is;  it  is  so  much  less  than  the  State  of  Xew 
York  as  to  make  it  advisable  to  1,600  corporations  to  organize 
there  and  pay  their  taxes  there. 

By  the  Chairman. 

Q.  What  would  you  say  to  so  amending  the  law  thai 
corporation  would  be  subject  to  the  same  payment  upon  nling 
its  certificate  in  this  State  that  a  domestic  corporation  is  required 
to  make  when  they  organize?  A.  It  would  bfing  additional 
revenue  to  the  State  of  New  York  for  the  time  being,  but  I 
think  it  would  have  a  tendency  to  drive  it  out  of  New  York. 


515 

) 

Q.  I  speak  now  of  foreign  corporations  that  do  business  in 
the  State  of  New  York?  A.  If  you  are  aware,  that  is  a  law  in 
regard  to  the  manufacturing  corporations;  I  have  had  occasion 
|  to  act  for  several  recently  before  the  Comptroller  to  have  the 
taxes  adjusted;  if  you  remember  under  the  manufacturing  law 
|  a  corporation  which  does  its  manufacturing  out  of  the  State  of 
New  York  is  bound  to  pay  its  tax  upon  the  amount  of  business 
[which  it  does  in  the  State  of  New  York,  and  upon  the  amount  of 
capital  here  in  the  State  of  New  York,  and  a  large  revenue 
>mes  to  the  State  from  it. 

Q.  I  refer  particularly  to  those  corporations  that  go  to  West 
Irginia  and  New  Jersey  and  organize  and  do  business  wholly 
this  State,  although  going  to  those  States  to  form,  for  the 
mrpose  of  escaping  the  tax  on  their  creation?  A.  Undoubtedly 
ley  do;  avowedly  they  do. 

Q.  What  would  you  say  to  the  proposition  that  they  pay  upon 
filing  of  a  certificate  in  this  State  a  tax  equal  to  what  they 
rould  pay  in  this  State?    A.  I  think  it  would  have  the  effect  as 
state. 

By  Mr.  Coggeshall. 

||  Q.  You  speak  with  reference  to  the  collateral  inheritance  law 
that  it  should  be  recast;  what  would  you  suggest  with  reference 
to  any  amendments,  if  anything?  A.  I  think  that  if  the 
jftommittee  should  take  the  English  law,  which  is  admirably 
llxpressed,  as  a  guide,  they  would  simplify  the  thing  very  much; 
lint  the  Court  of  Appeals  has  made  that  law  pretty  certain;  we 
Iftad  this  question  come  up  as  to  whether  any  gift  in  a  foreign 
Benevolent,  religious  or  charitable  corporation  this  State  could  tax 
It,  and  the  Court  of  Appeals  has  held  that  under  the  law  they 
•mst  pay  their  tax;  we  represented  the  Fairweather  estate;  he 

istributed  several  million  dollars  to  colleges,  without  regard  to 
Hpeir  geographical  location,  to  the  principal  institutions  through- 
Hut  the  United  States,  including  New  York;  the  Court  of  Appeals 

ivs  those  inside  of  New  York  get  theirs  without  paying  their 
per  cent  and  those  outside  had  to  pay. 


516 

By  Mr.  Guenther. 

Q.  You /said  you  favored  the  single  tax  idea?  A.  Yes,  sir: 
taxing  real  estate  alone,  excepting  the  three  things  I  spoke  of. 

Q.  What  would  you  do  with  the  improvements?  A.  I  am  not 
an  advocate  of  Henry  George  sufficiently  to  say  that  if  a  man 
chooses  to  get  a  building  worth  f  1,000,000,  and  he  gets  a  rental 
out  of  that  of  |250,000,  that  he  should  only  pay  a  tax  that  his 
next  door  neighbor  pays  that  only  gets  an  income  of  $20,000, 
or  has  a  vacant  lot  and  has  no  income. 


[asscr 


By  Mr.  Coggeshall. 

Q.  What  do  you  thnk  of  the  listing  system?    A.  The  Mi 
chusetts  system? 

Q.  Yes?  A.  I  have  studied  that;  I  will  tell  you  a  little  fact 
in  regard  to  it  which  is  this;  Senator  Vedder  asked  me  this 
question:  "Are  you  aware  that  the  laws  of  Massachusetts  read 
as  this  proposed  law  does?"  I  said  to  him:  "I  am  aware  of 
that,  and  also  aware  of  the  result  which  perhaps  may  not  he 
known  to  you,  and  which  confirms  what  I  have  said  about  the 
evasions  which  will  be  practiced  under  such  a  law;  the  day  fixed 
under  that  law  for  assessment  is  the  first  day  of  May,  and  on 
that  day  merchants  will  have  on  hand  only  about*  one-quarter 
of  his  average  amount  of  stock  they  carry;  they  sell  through  the 
latter  part  of  March  and  all  of  April,  and  on  the  second  day  of 
May  —  the  railroad  depots  on  the  first  of  May  are  filled  with 
goods,  the  bills  of  which  arrive  on  the  second,  and  the  goods 
themselves  are  removed  as  early  as  possible  on  the  morning  of 
that  day. 

By  Mr.  Guenther. 

Q.  Couldn't  you  reach  that  by  some  provision  of  law?  A.  The 
ingenuity  of  the  human  mind  to  escape  taxation  is  far  superior 
to  the  ingenuity  of  the  Legislature  in  collecting  taxation, 
whenever  you  discover  a  loophole  and  fix  it  up  it  is  only  to 
that  they  have  another  one. 


517 


By  Mr.  Coggeshall. 

Q.  What  have  you  to  say  as  to  the  income  tax?    A.  I  believe 

u  that  an  income  tax  that  can  be  fairly  collected  is  a  wise  tax,  but  the 

jl  difficulty  about  it  is  abhorrent  to  the  American  mind  to  have  to 

i>  go  through  an  inquisitorial  process  of  disclosing  all  the  income 

|  a  man  gets  and  where  he  gets  it;  I  think  the  experience  of  those 

I  who  remember  the  time  of  the  war  when  the  United  States  inter- 

1  posed  an  income  tax,  will  know  that  it  was  the  most  frightful 

I  source  of  perjury  ever  in  the  world;  there  was  a  man  who  boarded 

at  the  Fifth  avenue  hotel,  and  under  the  provision  of  the  law  a 

man  may  deduct  from  the  tax  the  rent  of  the  building  that  he 

occupied;  that  man  deducted  the  rent  of  the  Fifth  avenue  hotel. 

Q.  Explain  what  you  mean  by  an  excise  law?  A.  I  mean  in 
some  form  or  other  a  license  for  the  sale  of  liquor,  whether  you 
call  it,  as  in  Ohio,  a  direct  tax  on  liquor  itself,  or,  as  the  State  of 
[New  York,  imposed  upon  the  permission  to  deal  in  the  article; 
t  becomes  a  tax  which  the  State  gets  the  benefit  of. 
Q.  You  are  in  favor  of  what  was  known  as  the  Vedder  Tax  Law 
>rnc  years  ago?  A.  Not  necessarily  that;  I  don't  care  what  form 
it  is  in;  whether  from  license  or  any  way,  the  State  is  going  to 
t  the  benefit  of  the  revenue  from  that  traffic  whether  from  the 
cle  or  the  business;  my  idea  is  to  derive  as  much  as  would  be 
just;  those  three  sources  —  you  can  fix  it  so  that  the  tax  can  be 
itly  collected  from  all;  from  corporations,  from  inheritance  and 
in  liquors;  out  of  those  three  I  think  the  State  can  collect 
ts  just  proportion  of  the  tax  on  personal  property. 
Q.  Your  objection  to  personal  property  is  rather  as  to  the  defects 
the  enforcing  of  the  law?  A.  It  is  a  fact  that  the  State  has 
rver  been  able  to  collect  it  so  as  to  bear  upon  all  equally. 
Q.  There  is  no  question  but  that  personal  property  pays  a  larger 
te  of  interest  than  real  estate?  A.  I  think  so. 
Q.  And  that  if  it  could  be  reached  it  would  be  a  more  equitable 
s  of  taxation  ?  A.  No,  sir ;  I  think  real  estate  is  the  best  form 
tfe  have,  because  you  can  see  it;  there  it  is;  you  can  not  see  a 
nan's  personal  property;  he  may^  take  it  away;  he  can  not  take 
lis  real  estate  with  him. 


518 

Q.  But  he  can  try  to  dispose  of  it  for  the  purpose  of  getting 
personal  property,?  A.  No  matter;  somebody  will  get  hold  of  it. 

Q.  Assuming  personal  property  is  to  continue  to  be  taxed,  whafc 
have  you  to  say  as  to  not  allowing  any  deductions  for  indebtedness ; 
we  have  had  witnesses  who  have  testified  that  they  thought  it 
was  better  that  personal  property  should  be  assessed  without  any/ 
deductions  for  alleged  indebtedness?  A.  Now,  would  that  be  fair? 

Q.  I  am  asking  you?  A.  I  am  putting  it  to  you  as  a  thing  that 
carries  its  own  answer;  for  instance,  I  own  a  piece  of  real  estate; 
1  pay  the  entire  tax  on  that  real  estate;  it  is  mortgaged  at  sixty 
per  cent  of  its  value ;  I  am  thereby  paying  the  tax  for  that  personal 
property  and  I  ought  to,  I  think,  but  if  personal  property  is  to  be 
taxed  I  ought  not  to  pay  for  personal  property  independent  of  that, 
and  not  have  any  benefit,  and  this  man  who  loans  me  the  money 
benefits,  because  it  seems  to  me  that  a  tax  law  to  tax  person}® 
property  with  no  deductions  for  indebtedness  would  be  a  law 
for  the  rich  and  against  the  poor. 

Q.  What,  in  your  judgment,  would  be  the  effect  upon  the  valu»is 
of  real  estate,  if  taxation  was  confined  to  that  alone?    A.  It 
might  perhaps  before  the  tax  was  fairly  adjusted  affect  the  price  j 
of  real  estate,  but  when  it  became  adjusted  it  would  not  be* 
noticed. 

Q.  It  would  depreciate  it,  you  mean?    A.  I  think  it  mighl 
don't  know  as  it  would. 

Q.  It  would  increase  the  tax  also?    A.  Yes,  sir;  that  is  wl 
mean;  it  might  depreciate  the  value  of  the  property  temporal 
a  little,  but  in  less  than  five  years  it  would  adjust  itself. 

Q.  Do  you  know  any  State  where  that  law  exists?  A.  I  don't 
remember  that  there  is  any. 

Q.  Or  any  country?  A.  I  don't  remember  how  the  tax  law  is 
in  England;  my  recollection  is  that  England  does  not  tax  personal 
property  per  se;  it  taxes  certain  articles  like  liquors,  and  then  hasi 
an  income  tax  and  gets  its  revenue  from  personal  property. 

Q.  Isn't  there  a  different  rule  to  be  applied  to  agricultural 
lands  than  city  real  estate;  would  it  adjust  itself  to  the  altered1 
conditions  more  rapidly  than  farming  lands?  A.  Probably  Hj 
would. 


519 

Q.  JRents  might  be  increased  in  the  city,  while  a  farm  would  not 
produce  any  more  because  it  was  taxed?  A.  No,  sir;  it  would  not 
enhance  the  productive  capacity. 

Q.  The  man  on  the  farm,  the  result  would  be  that  he  would  be 
paying  a  larger  part  of  the  public  burden  while  his  income  was 
not  increased?  A.  In  niy  judgment,  the  amount  that  would  be 
added  would  be  insignificant;  for  instance,  if  the  net  revenue 
returns  from  a  piece  of  property  would  be  less  the  value  would 
be  less;  as  far  as  the  State  tax  was  concerned  there  would  be  a 
diminution  in  the  assessed  value  of  that  property,  and  there 
would  be  therefore  less  tax. 

Q.  The  great  tax  is  the  local  tax;  if  you  exempted  personal 
property  in  that  location  from  taxation  you  would  be  placing 
upon  the  land  all  the  tax  now  derived  in  that  locality  from  per- 
sonal property,  and  you  would  not  add  by  any  possibility  to  his 
[income?  A.  Can  you  tell  what  is  the  assessed  value  of  the 
igricviltural  lands  of  the  State? 

Q.  No,  sir.  A.  Because  as  I  have  it  here  in  1884  all  the  interior 
Lties'of  the  State  and  all  the  agricultural  districts  except  New 
rork,  Brooklyn  and  Buffalo,  the  entire  personal  property  is 
13,000,000;  now.  that  must  be  a  very  small  part  of  the  taxable 
ilue  of  the  State;  I  suppose  of  that  $93,000,000  it  would  be  safe 
say  that  Albany,  Buffalo,  Syracuse,  Utica,  Binghamton  and  all 
e  cities  of  the  State  would  pay  two-thirds  of  it,  and  that  the 
m  lands  themselves  probably  did  not  pay  on  over  $30,000,000 
personal  property;  now,  the  amount  derived  on  that  would  be 
small. 

By  Mr.  Hamilton. 

Q.   Would  not  the  results  which  you   say   would  follow    the 
imation  of  the  tax  on  personal  property  be  practically  accom- 
shed  by  the  laying  of  a  specific  tax,  very  light,  say  three-eighths 
ft  a  mill,   such   as   prevails   in  Pennsylvania,   which   would   be 
iccepted  by  the  owners  of  personal  property  as  a  fair  contribu- 
[ion  toward  the  government  of  the  State  and  its  expenses,  and 
•by  avoid  the  claim  that  it  was  being  unjustly  taxed,  and 
no   just  cause  of  driving  it  from  the  State?     A.  That  of 


520 

course  would  be  a  matter  of  experience  to  determine;  if  you  made 
it  sufficiently  small  —  whatever  rate  you  fixed  and  made  it  so 
that  it  would  be  universal,  there  would  be  less  complaint;  but 
the  difficulty  that  the  State  labors  under  is,  I  think,  an  endeavor 
to  kill  the  goose  that  lays  the  golden  egg;  the  prosperity  of  the 
State  of  New  York  is  due  more  than  anything  else  to  the  fact  that 
personal  property  is  not  taxed;  there  was  never  anything  that  was. 
so  detrimental  to  the  wealthy  and  the  poor  of  France  as  the 
revocation  of  the  edict  of  Nantes;  it  drove  out  tens  of  thousands 
of  the  best  of  France  into  England,  Germany  and  Holland;  a 
law  that  would  tend  to  drive  out  the  capital  of  New  York  woi 
be  as  disastrous  to  the  true  interests  of  the  State  as  that  edict. 

Q.  What  are  your  views  in  regard  to  what  is  known  as 
local  option  bill  suggested,  by  which  each  locality  can  detenni 
what  shall  be  taxed  and  to  what  extent?  A.  I  think  it  is  an 
admirable  law;  if  a  county  tries  it  and  they  find  it  is  a  benefit, 
the  other  counties  will  be  ready  to  adopt  it. 

Q.  It  would  have  the  effect  of  at  once  exempting  all  taxation 
on  personal  property,  would  it  not?  A.  I  think  it  would;  I  think 
as  soon  as  they  saw  how  it  operated  in  one  county  they  would 
immediately  want  it  themselves. 

Q.   If  one   county   adopted  a   system  of  not  taxing  personal 
property,  would  it  not  of  necessity  drive  other  counties  to  d< 
same  thing  whether  they  thought  it  prudent,  or  not?     A.  I  think 
it  would;  I  believe  that  the  sentiment  of  New  York  city 
that  If  the  city  authorities  have  the  power  to  exempt  personal 
property  they  would  do  it;  I  think  it  would  immediately  show  by 
the  result  it  was  so  wise,  that  every  other  county  would  adopt  it. 

By  the  Chairman. 

Q.  Considering  the  amount  of  personal  property  assessed  wiihin 
the  limits  of  Now  York  is  it  not  practically  untaxed  now'. 
Very  nearly;  there  is  one  gentleman  owning  a  costly  estate  in 
New  York  and  also  a  beautiful  residence  on  Fifth  avenue,  who 
says,  according  to  the  papers  —  1  don't  know  anything  about  it 
personally  —  that  he  Avould  submit  to  personal  taxes  on  f 8,000,000, 
but  he  said,  as  soon  as  they  put  him  any  higher  than  tha 


•   521 

would  make  his  residence  in  Newport;  now,  you  and  I  would 
be  perfectly  willing  to  retire  on  the  balance  of  the  personal 
property  he  has  got  over  the  $8.000,000. 

Q.  What  have  you  to  say  as  to  the  changing-  of  the  rate  of 
interest  as  fixed  by  law  now?  A.  I  don't  quite  agree  with  the 
wise  men  on  that,  but  still  T  A\ould  rather  not  complicate  the 
question;  in  the  last  two  years  in  all  the  amount  of  money  that 
has  been  loaned  to  our  office,  I  only  know  of  one  instance  where 
the  loan  was  made  at  six  per  cent;  we  have  no  regard  to  the  rate 
of  interest  that  Hie  State  fixes  in  making  loans  on  real  property; 
if  it  is  a  good  piece  of  property  and  a  suttick-nt  margin;  that  is, 
sixty  per  cent,  you  could  not  by  any  possibility  get  over  five 
per  cent;  we  are  making  loans  at  five  and  four  and  a  half  where 
they  are  exceptionally  good,  and  sometimes  as  low  as  four;  now, 
without  reducing  the  rate  of  interest  by  law  it  is  being  reduced 
by  virtue  of  1he  amount  of  capital  which  is  seeking  investment. 
Q.  Arc  you  familiar  at  all  with  the  conditions  in  agricultural 
districts  as  to  loans?  A.  No,  sir;  because  capital  is  so  timid  that 
any  that  we  have  to  do  with  we  can  not  get  anybody  to  look 
at  a  piece  of  property  if  he  has  got  to  cross  the  Harlem  river  or 
East  river;  every  man  wants  to  be  able  to  go  and  see  it;  the 
capitalists  in  Brooklyn  make  their  loans  there  and  the  capitalists 
in  New  York-  make  their  loans  in  New  York,  and  I  suppose  it 
applies  to  the  country  as  well. 

Q.  Assume  that  the  farmer  uniformly  has  to  pay  six  per  cent 
a  loan,  what  would  you  then  say  as  to  the  wisdom  of  reducing 
from  six  to  five?    A.  I  think  a  good  deal  of  what  Mr.  Smith 
ys  of  the  ingenuity  of  the  human  mind  and  especially  of  the 
pitalist  to  get  his  income;  I  think  they  would  find  some  wray  or 
er  to  evade  the  law;  I  mean  the  great  bulk  of  the  money 
t  is  loaned. 

By  Mr.  Aiusworth. 

The  great  bulk  in  agricultural  communities  is  loaned  from 
mey  centers?     A.  Yes,  sir. 

Now,  would  a  State  law,  reducing  the  rate  of  interest,  in 
ir  judgment,  benefit  that  class" of  loans?     A.  The  only  thing 

66 


522  ' 

to  do  is  this;  if  you  give  with  one  hand  and  rake  with  the  other ,^ 
perhaps  you  would  equalize  the  thing  pretty  well;  I  think  capital 
would  make  no  complaint  if  the  law  was  made  as  Mr.  Smith  hajl 
suggested;  if  you  say  we  will  exempt  all  personal  property  froir.^ 
tax,  and  on  the  other  hand  when  there  is  no  agreement  in  regardf 
to  the  rate  of  interest  as  he  suggests;  I  think  that  capital  woulfl 
not  be  half  so  reluctant  as  it  is  to-day. 

Q.  If  you  had  a  client  who  had  $50,000  to  loan  and  somebody 
wanted  to  borrow  it  on  a  farm  in  New  York  State  at  fire  per 
cent,  and  you  could  loan  it  in  New  York  at  four  and  a  half,  when! 
would  the  money  be  probably  loaned?  A.  So  far  as  it  woulfB 
pass  through  our  office,  in  the  city  of  New  York. 

Mr.  Parsons. —  It  seems  to  me  that  if  you  reduce  the  legal  rate 
of  interest  to  five  per  cent,  the  result  will  be  that  the  loans  wl 
are  now  existing  upon  the  farms  which  are  made  from  the 
tenters  will  be  called  in. 

The  Witness. —  I  suppose  that  this  question  of  six  per  c< 
is  a  question  that  does  not  amount  to  anything  practically  to  the 
people  who  borrow  on  bond  and  mortgage.  So  far  as  the  savii 
banks  and  life  insurance  companies  are  concerned,  you  might 
ttell  hare  a  law  of  the  State  that  is  should  be  seventy-five 
cent. 

By  the  Chairman. 

Q.  What  have  you  to  say  about  doing  away  with  the  fixed 
altogether?  A.  WTiat  has  been  the  result  in  regard  to  the 
amendment  to  the  law  which  yjou  made  a  few  years  ago,  in 
which  you  provide  that  call  loans  can  be  made  at  any  rate  of 
interest  that  they  pleased?  Hasn't  that  been  shown  to  be  of 
great  advantage,  and  hasn't  it  always  been  shown  that  the  rate 
of  interest  has  declined  in  Wall  street  under  the  operation  of 
that  law?  When  a  man  was  in  a  tight  place  and  wanted  to  bor.- 
row  money,  he  had  to  pay  one-half  per  cent  a  day  and  commission; 
in  the  panic  it  went  up  to  a  higher  rate  and  went  down  again; 
that  abolition  of  the  usury  law  has  proved  to  be  of  the  greatest 
benefit  to  the  borrower  and  not  to  the  capitalist;  see  the  busi- 
ness with  the  banks;  we  all  know  in  New  York  ihai  in  ordinary 


I  times  in  the  last  five  years  the  banks  have  not  been  able  to  get 
I  all  the  discounts  there  were  from  the  customers  and  have  to  go 
I  out  and  buy  it. 

Q.  But  the  borrowers  in  the  country  have  to  pay  six  per  cent 
I  at  the  banks  —  the  farmers  and  country  merchants;  it  is  from 
1  that  class  of  people  very  largely,  I  think,  that  the  demand  for  the 
reduction  in  the  rate  of  interest  comes?  A.  You  see  in  connec- 
tion with  that  they  can  make  what  arrangements  they  please;  if 
capital  will  flow  in,  the  rate  will  go  down  just  as  it  did  in  Wall 
street;  last  week  I  recovered  a  verdict  in  a  litigation  which  has 
been  pending  since  1876;  we  could  not  tell  how  much  the  jury 
would  find  we  were  entitled  to,  and  therefore  instead  of  saying 
the  interest  on  such  a  sum  would  be  so  much,  I  put  a  clerk  on  the 
stand  and  had  him  make  a  computation  of  the  percentage,  and  it 
was  exactly  100  per  cent,  and  the  jury  came  in  and  said:  "We 
find  for  the  plaintiff  f  10,500  and  100  per  cent  interest ;"  now, 
[that  was  from  1876  to  1880,  at  the  rate  of  seven  per  cent,  and 
1880  to  1893  at  the  rate  of  six  per  cent,  and  of  course  if  we  had 
just  so  much  money  we  could  have  been  collecting  our  interest 
and  compounding  it,  and  it  made  it  less  than  five  per  cent  would 
I  have  been. 

John  Gr.  H.  Myers,  called  as  a  witness,  being  duly  sworn,  testi- 
fied as  follows: 

By  Mr.  Hamilton. 

Q.  Where  do  you  reside?    A.  In  New  York  city. 
Q.  What  is  your  business?    A.  A  practicing  lawyer. 
I     Q.  Your   present   occupation   is   what?    A.  Attorney   for   the 
receiver  of  taxes  of  the  city  of  New  York. 

Q.  What  suggestions  have  you  to  make  to  the  committee  in 
I;  regard  to  the  existing  laws  affecting  the  collection  or  levying 
Jjof  taxes?    A.  First,  I  would  like  to  make  a  suggestion  with  ref- 
1  erence  to  the  remedy  under  the  law;  at  present  there  are  two 
remedies  afforded  to  the  tax  department  for  the  enforcement 
and  collection  of  personal  taxes;  one  is  by  a  summary  proceeding 
)  punish  the  debtor  for  the  non-payment  of  his  taxes,  which 
Its  in  committing  him  to  the  county  jail;  the  other  is  the 


524 

remedy  of  action  to  recover  the  amount  by  an  ordinary  common- 
law  action;  the  severer  remedy  for  punishing  for  contempt,  it 
seems  to  me,  should  be  abolished;  that  is  the  first  suggestion  I 
have  to  make;  I  find  that  in  my  three  years  in  charge  of  the 
office  that  practically  imprisonment  is  very  harsh,  because  it 
simply  reaches  the  poorer  class  who  happen  to  be  on  the  tax 
list;  they  are  frightened  into  coming  to  pay  because  they  lii 
that  threat  over  them,  and  I  have  known  instances  where  tin 
have  gone  off  and  put  in  pawn  personal  property  in  order 
raise  the  money  to  pay  the  taxes;  I  have  also  had  one  or  V 
widows  come  to  me,  and  not  knowing  what  the  law  was, 
having  disposed  of  what  was  left  to  them  by  their  husbands,  th< 
found  themselves  in  difficulty  because  they  had  not  gone  to 
surrogate,  and  have  gone  off  and  in  some  way  by  borrowii 
and  what  not  have  obtained  money  to  pay  that  tax;  now, 
man  who  can  afford  to  pay  has  evaded  it  by  going  away,  so 
we  could  not  serve  a  paper  on  hirn;  in  the  ordinary  proceedii 
of  acquiring  by  a  suit  within  the  last  year  I  find  that  it  woi 
much  better;  those  who  can  afford  to  pay  and  ought  to  pay 
reached  by  judgment  and  execution;  the  poorer  ones  we  sej 
a  summons  and  complaint  on,  which  results  in  a  judgment;  it 
returned  unsatisfied,  and  an  examination  under  supplemenl 
proceedings  shows  that  they  can  not  pay  and  never  can  pay. 

Q.  And  never  ought  to  have  been  taxed?  A.  And  never  ought 
to  have  been  taxed;  I,  therefore,  make  a  suggestion  to  the  com- 
mittee whether  it  would  not  be  wise  to  abolish  that;  a  man  who 
wants  to  hold  his  position  in  that  office  is  obliged  to  follow  up  that 
BiDumary  proceeding  first,  because  there  is  a  limit,  of  tune  *n 
which  you  have  to  commence  it,  and  the  financial  office  expects,. 
of  course,  you  will  to  your  duty;  I  have  verf  often  found  myself 
very  much  embarrassed  by  having  people  taxed  who  never  ought 
to  have  been  taxed ;  the  second  suggestion  I  would  like  to  make  is 
this:  I  find  that  under  this  collateral  and  direct  tax  law  —  the 
inheritance  tax  —  estates  very  frequently  are  taxed  twice;  the 
husband  or  whoever  it  is  dies  and  leaves  an  estate,  probably 
f  10,000,  or  just  n  little  over  |10,000,  just  so  it  comes  within  the 


5^5 

inheritance  tax  law;  he  is  taxed  by  the  State  tax  directly,  and 
the  executor  finds  that  he  is  also  taxed  on  that  same  amount  by 
the  local  authorities,  so  that  for  one  year  the  executor  is  taxed 
twice  on  the  same  estate,  and  it  does  seem  to  me  that  this  is  unjust, 
and  that  the  law  did  not  intend  that;  the  remedy  that  I  suggest 
for  that  if  it  is  practicable,  and  it  strikes  me  it  is,  is  that  at  least 
for  one  year  after  the  death  of  the  intestate  or  testator  that  the 
executor  be  exempted  from  taxation  for  local  purposes,  and  that 
may  be  penalized,  have  the  State  deduct  from  its  tax  that 
lit  collects  from  the  county  the  same  amount  which  the  State 
collects  direct  from  the  executor  or  trustee  as  a  direct  tax;  in  that 
way  the  county"  would  not  lose  anything;  I  have  found  a  number 
of  estates  since  this  collateral  and  direct  inheritance  tax  laws  came 
into  existence  that  we  caught  in  that  way;  I  would  just  say  here, 
[because  the  question  has  been  asked  once  or  twice  during  the 
evening,  what  proportion  the  assessed  valuation  of  personal 
[property  in  the  city  of  New  York  bears  to  the  valuation  of  the 
>roperty  in  the  city  of  New  York;  I  can  say  that  for  the  year  1892, 
i*sonal  property  bore  the  relation  of  one-sixth  to  the  entire  aggre- 
gate value  of  our  property  in  the  city  of  New  York,  real  and  per- 
mal,  and  it  paid  a  tax  about  in  the  same  proportion;  that  is, 

>nal  property  paid  about  one-sixth  of  the  tax. 
Q.  Have  you  found  any  difficulty  under  the  present  law  from 
tecutors  where  there  are  more  than  one  to  an  estate,  changing 
ieir  residence  from  one  place  to  another  —  going  outside  of  the 
ite?    A.  I  find  that  they  do  not  go  out  of  the  State;  they  go 
ito  Eichmond  county  or  Westchester  or  Brooklyn  and  carry  the 
curities  and  everything  with  them;  we  can  only  tax  theresi- 
snt  who  swears  that  his  co-executor  has   the   securities  in  the 
ther  place. 

Q.  Do  you  think  that  the  property  of  an  estate  should  be  taxed 
rhere  it  is  located?    A.  Where  the  letters  testamentary  were 
led. 

Without  regard  to  the  residence  of  the  executor?    A.  Yes, 
•;  in  that  way  New  York  city  would  benefit  largely. 
Q.  What  do  you  say   about   taxing   the   personal   property  of 
ites?    A.  I  believe  that  they  should  be  taxed. 


526 


ne 

yt 

3ID. 


Q.  Assuming  that  the  estate  is  money,  and  as  you  have  heard 
here  loans  are  made  in  New  York  from  four  to  four  and  a  half  per 
cent,  and  the  tax  rate  is  anywhere  from  one  and  eighty-five  one 
himdredths  to  two,  is  not  that   very   severe  upon  the  propert 
A.  Yes,  sir;  it  is. 

Q.  That  is  the  reason  I  asked  you  what  you  say  as  to  the  wisdom, 
of  taxing  personal  property  of  estates?  A.  I  do  believe  in  taxing, 
but  it  is  one  thing  to  tax  and  another  to  overtax. 

Q.  Have  you  any  idea,  to  suggest  to  the  committee  as  to 
taxing  estates  and  yet  relieve  them  to  some  extent  from  what  I 
have  suggested?  A.  I  do  not  know  that  I  am  prepared  intelli- 
gently to  give  an  opinion  upon  that. 

Q.  Would  the  levy  of  a  uniform  specific  tax  avoid  that  hardship, 
if  it  is  a  hardship?  A.  Perhaps  it  would;  to  some  extent  it 
would;  you  are  not  referring  now  to  the  imprisonment? 

Q.  No;  I  am  referring  now  to  the  personal  property  of  estates 
where  the  earning  capacity  is  largely  destroyed  by  taxation  — 
not  the  earning  capacity,  but  the  earnings  are  depleted  by  reason 
of  taxation,  so  that  the  net  income  is  loss.  A.  If  the  estate  had 
its  money  out  at  four  per  cent  and  it  had  to  pay  two  of  a  tax; 
it  would  be  a  great  hardship  to  tax  it  two  per  cent. 

Q.  What  would  you  say  about  this;  making  the  tax  on  the 
collateral  or  direct  sufficiently  heavy  to  justify  the  exemption 
of  the  personal  property  of  the  estate  from  taxation  for  the  usual 
period  allowed  by  law  for  an  accounting  —  eighteen  months?  A. 
Without  having  had  that  before,  I  should  say  that  might  meet 
the  difficulty  and  might  be  a  remedy  and  relieve  the  estates;  I 
should  be  in  favor  of  abolishing  the  personal  tax  matter  entirely 
in  the  city  of  New  York,  if  it  were  not  for  this  one  thought  that 
enters  into  it  in  my  opinion,  and  that  is  that  the  tenant  rent-paying 
people  of  the  cities  would  be  the  ones  that  would  suffer  if  the 
entire  personal  tax  was  abolished;  I  believe  it  would  result  in  an 
increase  of  rents;  it  is  a  well-known  fact  that  a  very  large  pro- 
portion of  the  residents  of  the  cities,  especially  of  the  city  of 
New  York,  are  not  owners  of  real  estate,  and  those  who  do  own 
real  estate  are  not  going  to  bear  the  entire  burden  of  paying 
the  running  expenses  of  the  city  or  State  government;  if  obliged 


527 

to  pay  an  increased  tax,  as  they  will  be  if  this  personal  tax  is 
entirely  abolished,  they  will  look  somewhere  else  to  have  somebody 
par  it,  and  very  naturally  would  look  to  their  tenants,  and  it 
would  result,  in  my  opinion,  in  an  increase  of  rent,  and  you  would 
hear  an  outcry  from  the  tenantry  of  New  York  and  Brooklyn 
against  the  abolition  of  personal  taxes;  if  the  other  who  owned 
the  real  estate  would  be  willing  to  bear  the  one-sixth  per  cent 
additional  and  pay  the  taxes,  then  we  might  do  that. 

Q.  You  say  that  one-sixth  of  the  total  taxation  comes  from 
taxation  on  personal  property?  A.  About  one-sixth;  we  can  not 
get  it  exactly;  it  is  in  the  neighborhood  of  one-sixth;  it  was  last 
year  about  one-sixth  of  the  tax. 

Q.  Yon  say  you  are  in  favor  of  abolishing  imprisonment  alto- 
gether? A.  Yes,  sir;  I  am;  we  have  abolished  imprisonment 
for  debt  in  New  York,  and  that  is  the  only  remnant  left,  and  it 
Us  time  we  abolished  that. 

Q.  The  theory  is  that  if  a  man  is  liable  to  taxation  he  can  be 
reached  by  civil  proeess?  A.  He  can  be  reached  if  he  has  got 
property;  if  -you  follow  him  with  supplementary  proceeding*  it 
will  be  reached,  and  if  the  examination  shows  he  hasn't  it  to 
pay,  it  is  not  policy  to  oblige  him  to  pay  what  he  has  not  got. 

1 U  Mr.  Malby. 

Q.  Have  you  any  suggestions  to  make  as  to  the  manner  in  which 
the  collection  of  personal  taxes  can  be  increased?  A.  Yes,  sir; 
if  the  officers  in  every  county  would  follow  those  people  up  who 
move  from  one  county  to  another,  and  do  it  for  the  purpose  of  get- 
ting rid  of  the  tax,  then  they  would  be  obliged  to  pay  it  some- 
where, and  they  would  not  run  from  the  city  of  New  York  or 
.Rochester  or  Brooklyn;  I  know  of  one  case  where  a  man  lived 
in*  the  Navarro  Flats  lives  in  West  Chester,  worth  millions;  he  has 
fcone  there  to  escape  the  payment  of  taxes. 

By  Mr.  Coggeshall. 

Q.  A  great  deal  of  the  difficulty  is  caused  by  the  lax  way  of 
administering  the  law?  A.  Yes,  sir. 

The  committee  then  went  into  executive  session,  and  on  motion 
adjourned  to  meet  in  New  York,  February  10  and  11,  1893,  at 
1.1  a.  in. 


528 

Joint  Committee  on  Taxation, 

New  York,  February  10,  1893. 
The  committee  met  pursuant  to  adjournment. 

William   J.   Kogers,   called   as   a   witness,   being   duly   sworn, 
testified  as  follows: 

Bv  Mr.  Hamilton. 


Q.  Where  do  you  live?    A.  In  East  Orange,  New  Jersey. 

Q.  And  you  were  subpenaed  here  as  an  officer  of  the  Condensed 
Milk  Company?  A.  Yes,  sir. 

Q.  Which  has  its  office  where?  A.  The  main  office  at  71 
Hudson  street,  New  York  city. 

Q.  .And  its  corporate  title  is?  A.  The  New  York  Condensed 
Milk  Company. 

Q.  And  its  capital  stock  is?    A.  Three  million  dollars. 

Q.  Organized  under  the  laws  of  New  Jersey?  A.  Of  the  State 
of  New  Jersey. 

Q.  How  long  has  it  been  incorporated?  A.  Since  December, 
1891. 

Q.  Prior  to  December,  1891,  was  it  incorporated  under  the 
laws  of  any  other  State?  A.  The  laws  of  the  State  of  New  York. 

Q.  And  under  what  name?    A.  The  same  name. 

Q.  With  the  same  capital  stock?    A.  No,  sir;  a  smaller  amount 

Q.  At  the  time  of  the  change  from  incorporation  under  the  laws 
of  the  State  of  New  York  to  the  present  incorporation  under 
the  laws  of  the  State  of  New  Jersey  were  there  other  corporations 
included  in  it;  that  is,  was  there  a  trust  formed?  A.  No,  sir. 

Q.  Can  you  explain  to  the  committee  what  causes  led  to  the 
change  of  incorporation  from  the  State  of  New  York  to  the  State 
of  New  Jersey?  A.  We  were  about  reorganizing,  with  the  inten- 
tion of  increasing  our  capital  stock,  and  about  that  time  there 
were  very  objectionable  laws  of  the  State  of  New  York;  and  the 
laws  of  the  State  of  New  Jersey,  as  I  understand,  were  much 
more  favorable  to  corporations,  so  we  were  advised. 

Q.  Can  you  specify  in  what  respects  the  laws  of  the  State  of 
New  York  presented  the  objections  you  refer  to?  A.  One  of  the 
reasons,  I  believe,  was  that  you  could  organize  more  readily  in  the 


529 

State  of  New  Jersey,  with  less  delay;  that  was  one,  and  there 
was  another  one  that  the  laws  of  the  State  of  New  York  at  that 
time,  a  recent  law,  a  law  passed  and  went  into  effect  May,  1891, 
where  the  reports  necessary  to  be  made  were  very  objectionable 
to  a  corporation;  in  other  words  it  simply  made  public  the  whole 
business  and  put  into  the  hands  of  our  competitors  information 
that  was  not  desirable  to  let  them  have;  that  was  one  of  the 
most  objectionable  clauses  I  think  in  that  law. 

Q.  Was  the  subject  of  taxation  also  considered  objectionable 

•.as  imposed  by  the  laws  of  this  State?    A.  No,  sir;  I  don't  think 

'there  is  any  objection,  so  far  as  I  know;  allow  me  to  correct  that; 

•I  understand  that  there  was  a  little  advantage  in  the  franchise, 

as  I  understand,  but  the  difference  I  don't  know  on  a  capital 

stock  of  13,000,000;  perhaps  f 3,000  or  |4,000  which,  of  course, 

is  an  item. 

Q.  Prior  to  1891  your  offices  were  in  the  city  .of  New  York?  A. 
Yes,  sir. 

Q.  Was  there  any  change  made  to  your  incorporation  under  the 
.laws  of  New  Jersey?  A.  In  the  offices  or  in  the  officers? 

Q.  Officers?  A.  Yes;  there  was  an  increased  number  of  direc- 
tors in  order  to  comply  with  the  New  Jersey  laws. 

Q.  Practically,  then,  in  the  transaction  of  your  business  it  was 
conducted  in  the  same  way  and  in  the  same  place  as  it  had  been 
while  you  were  incorporated  under  the  laws  of  this  State?  A. 
Yes,  sir. 

Q.  What  tax,  if  any,  does  your  company  pay  to  the  State  of 
New  York?  A.  We  pay  the  regular  real  estate  tax;  we  havfj 
manufactories  throughout  the  State,  several  in  number  and  we 
also  pay  a  personal  tax. 

Q.  What  personal  tax  do  you  pay?  A.  I  presume  that  is  a 
local  tax;  I  am  not  certain  about  that. 

Q.  You  do  not  pay  any  direct  tax  to  the  State  of  New  York, 
do  you?  A.  I  do  not  think  we  have  as  yet;  we  filed  the  neces- 
sary papers,  and  I  do  not  know  exactly  what  the  result  is. 

Q.  Have  you  applied  for,  and  Jjave  you  obtained  a  certificate 
for  leave  to  do  business  in  this  State?    A.  Yes;  we  have  responded 
to  all  the  requirements  of  the  laws  of  the  State  of  New  York. 
67 


530 


icor 


„ 

sir, 


Q.  The  fact  is  then  that  practically  doing  business  under  iru 
poration  by  the  laws  of  New  Jersey  which  is  the  same  business 
only  increased  in  capital  which,  was  carried  on  under  the  laws 
of  the  State  of  New  York,  yet  you  are  not  paying  the  tax  which 
is  paid  by  the  domestic  corporations  of  the  State  of  New  York? 
A.  Yes;  we  are  paying  the  same  tax  as  we  always  paid. 

Q.  I  say  you  are  not  paying  the  tax  which  is  assessed  u] 
domestic  corporations  in  the  State  of  New  York?    A.  Yes,  sir, 

Q.  The  tax  upon  your  capital  stock,  your  dividends?     A.  We 
are  a  manufacturing  corporation. 

Q.  You  are  purely  a  manufacturing  corporation?    A.  Purely 
a  manufacturing  corporation;  I  would  state  as  to  the  laws  of  the 
State  to-day,  they  have  been  changed,  as  I  understand  it,  though 
I  have  not  paid  much  attention  to  it  since  we  reorganized,  bui 
in  looking  over  a  copy  of  the  amended  law,  there  is  no  objectio 
that  I  can  see  to-day  that  existed  at  the  time  we  reorganized  i 
1891;  it  seems  that  practically  the  laws  of  the  State  of  N 
York  to-day  are  practically  the  same  as  the  New  Jersey  laws. 

Q.  What  part  of  your  business  is  transacted  in  the  State  o 
New  Jersey?  A.  We  have  a  branch,  office  there,  both  in  Jerse 
City,  and  also  in  Newark. 

Q.  To  what  extent  is  your  business  transacted  there?  A.  Ver 
little. 

By  the  Chairman. 

Q.  Purely  local?  A.  Not  purely  local;  no,  sir;  if  you  mea. 
our  goods,  our  goods  are  sold  all  over  the  United  States;  in  th 
State  of  New  Jersey  wre  have  two  offices  and  stables  for  th 
delivery  of  our  goods,  the  same  as  we  have  to  Brooklyn. 

Q.  Do  you  know  the  valuation  on  which  you  paid  taxes  in  thi 
city?  A.  I  could  not  tell  exactly;  no,  sir. 

Q.  Have  you  an  idea?  A.  I  would  not  like  to  guess  at  it;  th 
assessment  was  made  and  paid  at  the  time;  I  simply  passed  i 
the  papers  and  the  treasurer  sent  his  check. 

Q.  Where  are  your  factories?  A.  There  are  several  throughoi 
the  State  of  New  York. 


531 

Q.  Are  they  all  in  the  State  of  New  York?  A.  Not  all;  no, 
sir;  we  have  two  factories  in  the  State  of  Illinois;  I  say  "  we,"  that 
is  our  corporation. 

By  Mr.  Malby. 

Q.  You  say  you  are  a  manufacturing  corporation;  do  you  pay 
any  tax  at  the  present  time  in  the  State  of  New  York  on  your 
capital  stock?  A.  We  have  filed  according  to  the  requirements 
of  the  State,  the  necessary  report;  I  do  not  think  we  have  heard 
yet  from  the  State  authorities. 

Q.  Isn't  that  simply  a  certificate  which  the  law  requires  shall 
be  filed  in  order  to  do  business?  A.  No,  sir;  not  at  all;  it  is  a 
complete  statement;  I  do  not  know  in  what  form  it  is. 

Q.  When  you  filed  the  papers  that  you  have  filed  under  the 
existing  laws  will  you  have  to  pay  a  tax  on  your  capital  stock? 
A.  I  am  not  prepared  to  answer  that;  understand  me  when  I 
say  that;  I  have  only  done  business  under  this  corporation  for 
a  little  over  a  year. 

Q.  Have  you  paid  any  tax  in  the  State  of  New  York  on  your 
capital  stock  up  to  the  present  time?  A.  No,  sir. 

Q.  Or  on  your  dividends?    A.  No,  sir/ 

Q.  When  you  say  you  are  not  prepared  to  state  whether  you 
will,  under  the  present  filing  of  your  papers,  pay  a  tax  you  don't 
know  what  law  is  applicable  to  that  subject?  A.  I  do  not;  we 
filed  our  papers  under  advice  of  our  counsel. 

Q.  Do  you  have  to  pay  any  tax  on  your  capital  stock  or  divi- 
dends in  the  State  of  New  Jersey?  A.  No,  sir;  I  presume  not. 

Q.  Were  there  several  corporations  doing  the  same  kind  of 
business  you  were  previous  to  1891  in  the  States  of  New  York 
land  New  Jersey  when  you  reorganized  your  company?  A.  I 
jthink  likely. 

Q.  Were  they  consolidated  in  this  new  company?  A.  Not  at 
all;  no,  sir. 

Q.  No   consolidation    whatever?    A.  None,    whatever. 

By  the  Chairman.  „ 

Q.  Do  you  manufacture  wh&t  is  known  as  Borden's  condensed 
milk?  A.  Yes.  sir;  that  is  our  brand. 


532 

By  Mr.  Malby. 

Q.  Do  you  remember  what  your  capital  stock  was  in  New  Y( 
A.  Forty  thousand  dollars. 

Q.  And  now  it  is  $3,000,000?    A.  Yes,  sir. 

By  Mr.  Hamilton. 

Q.  Upon  what  amount  of  personal  property  do  your  companj 
pay  a  tax  in  the  city  of  New  York?  A.  I  have  already  answered 
that. 

Q,  What  was  your  answer?  A.  That  I  do  not  remember  the 
exact  amount;  I  remember  we  did  pay;  that  it  passed  through  1113 
hands  to  the  treasurer. 

Q.  What  is  your  best  recollection  as  to  the  amount?  A.  I  woulc 
hardly  like  to  say  that;  I  have  no  reason  for  keeping  it  back,  bui 
it  would  only  be  a  guess. 

By  Mr.  Malby. 

Q.  You  say  you  pay  a  personal  tax;  what  does  that  consist 
A.  That  is. stock  on  hand;  what  we  are  assessed. 

Q.  It  does  not  have  any  reference  to  capital  stock?    A.  No, 

By   the  Chairman. 
Q.  Is  it  merchandise  and  personal  effects  of  the  corporatio] 
hf-re?    A.  Yes,   sir. 

By  Mr.  Hamilton. 

Q.  And  that  is  all  you  referred  to  as  a  tax  on  personal  property 
a  tax  on  merchandise  and  stock  on  hand?    A.  Yes,  sir;  that 
what  I  had  reference  to. 

By  Mr.  Malby. 

Q.  Can  you  give  us  approximately  the  assessed  valuation  of  you 
real  Estate  in  New  York?  A.  I  should  say  f  1,000,000  a  year 
more;  I  can  give  you  the  exact  figures  if  you  desire  to  have  thei 
later  on;  that  is  a  rough  calculation;  we  have  about  seve 
factories  in  the  State  of  New  York. 

Q.  If  you  can  give  us  approximately  the  amount  on  the 
sonal  property?    A.  I  can  do  that  if  you  would  like  to  have 


533 

By  the  Chairman. 

Q.  You  will  furnish  it  to  the  committee;  send  it  to  nie,  and  T 
\\ill  see  that  the  committee  get  is?  A.  Yes;  I  will. 

Charles  C.  Burns,  called  as  a  witness,  being  duly  sworn,  testi- 
Ified  as  follows: 

By  Mr.  Hamilton. 

Q.  Where  do  you  live?  A.  My  home  is  in  Rochester,  New  York; 
|bnt  I  am  here  now. 

Q.  You  mean  you  reside  in  New  York  city  now?    A.  No;  my 

te  is  in  Rochester. 
Q.  You  also  have  a  residence  in  the  city   of   New   York?    A. 

iporarily;  I  remain  here. 

Q.  You  are  treasurer  of  the  National  Starch  Company?    A.  Yes. 
Q.  That  is  a  corporation  organized  under  the  laws  of  the  State 
Kentucky?     A.  Kentucky. 

Q.  With  what  amount  of  capital  stock?    A.  Ten  million  five 
Lucdred  thousand  dollars. 

Q.  How  long  has  it  been  organized  as  a  corporation  under  the 
iws  of  Kentucky?    A.  Since  the  1st  of  May,  1890. 
Q.  Prior  to  May  1,  1890,  under  the  laws  of  what  State  was  it 
Trying  on  business  or  was  it  incorporated?     A.  It  was  not  in 
Existence. 

Q.  At  the  time  it  was  organized  was   it  made  up  of  different 
)rporations  which  had  lief  ore  existed?    A.  No,  sir;  it  was  a  pur- 
for  cash;  an  out  and  out  purchase  of  different  properties. 
.Q.  Bought  differ  out    properties  or  bought    stocks  in  different 
xrations?    A.  No,  sir;  it  was  properties;    it  was  corporations 
some   cases    and   in   other    cases   it   was   simply   a   private 

lership. 

Q.  What  properties  in  the  State  of  New  York  were  included 
that  corporation?    A.  The  Glen  Cove  Manufacturing  Company 

the  Niagara  Starch  Works  at  Buffalo. 
Q.  Any  others?     A.  In  New  York  State? 
Q.  Yes?    A.  No,  sir. 

Q.  What  other  States  were  the  corporations  in?    A.  Indiana, 
iois,  Iowa,  Kansas. 


534 


my? 


Q.  What  proportion  of  the  capital  stock  was  the  Glen  C< 
Starch  Company  made  up  of;  you  say  your  capital  stock  v 
110,000,000;  what  proportion  was  made  up  on  the  G-len 
company?    A.  I  don't  know  that  I  am  entitled  to  answer  su< 
question  as  that;  that  is  a  private  matter. 

Q.  At  what  amount  was  it  valued  or  placed  in  this  agj 
gation?    A.  I  can  not  say  that. 

Q.  About  what  amount?    A.  I  can  not  say  that  at  all. 

Q.  At  what  amount  had  the  Glen  Cove  company  been  capital- 
ized while  it  was  conducted  as  a  separate  corporation?  A.  I 
don't  know. 

Q.  Haven't  you  any  idea?    A.  No,  sir. 

Q.  Had  you  been  connected  with  the  Glen  Cove  company' 
A.  No,  sir. 

Q.  At  what  amount  had  tin1  Niagara  company  been  capital- 
ized? A.  I  don't  know. 

Q.  Had  you  been  connected  with  that  company?    A.  No,  sir 

Q.  Do  you  know  anything  about  the  previous  business  o 
your  company  whatever?  A.  What  previous  business? 

Q.  As  to  what  amount  of  capital  stock  or  property  was  ownec 
by  these  various  corporations?  A.  No,  sir;  I  am  in  the  employ 
of  the  new  company,  and  I  do  not  know  anything  about  the  ol< 
companies. 

Q.  Were  you  employed  by  any  of  the  old  companies?  A 
No,  sir. 

Q.  Have  you  received  any  information  as  to  what  the  value 
of  those  properties  were?  A.  I  don't  remember. 

Q.  Did  the  Glen  Cove  company  go  out  of  existence  when  you 
company  was  formed?  A.  It  did. 

Q.  Did  the  Niagara  company  also  go  out  of  existence  then?  A 
Yes,  sir. 

Q.  They  ceased  to  be  corporations  of  the  State  of  New  York 
A.  Yes,  sir. 

Q.  Where  is  the  principal  office  for  the  transaction  of  the  busi 
ness  of  your  company?  A.  Covington,  Kentucky. 

Q.  What  office  do  you  maintain  in  the  city  of  New  York?  A 
At  No.  20  Broadway. 


535 


Q.  For  what  purpose  is  that  office  used?  A.  For  the  transfer 
of  stock  and  securities  of  the  company  principally. 

Q.  It  is  also  used  for  the  transaction  of  the  general  business 
of  your  company?  A.  Yes,  sir;  the  general  business  of  the  com- 
pany, of  course,  is  in  Covington;  we  Lad  an  office  there. 

Q.  Is  the  office  in  New  York  used  for  the  general  transaction 

the  business  of  your  company?     A.  Yes,  sir. 

Q.  Purchase  and  sales?    A.  Yes,  sir. 

Q.  How  many  officers  of  your  company  reside  in  the  State  of 
New  York?  A.  I  am  the  only  one. 

Q.  Do  you  know  the  reasons  which  led  to  its  incorporation 
under  the  laws  of  Kentucky?  A.  No,  sir;  I  was  not  one  of  the 
incorporators. 

Q.  Does  your  company  own  any  real  estate  in  the  State  of 
New  York?  A.  Yes,  sir. 

Q.  Where  is  it  located?    A.  Glen  Cove  and  Buffalo. 

Q.  Does  your  company  pay  any  taxes  upon  personal  property 
in  the  State  of  New  York?  A.  Yes,  sir. 

Q.  What  amount?    A.  I  can  not  remember  that. 

Q.  Upon  what  personal  property  does  it  pay  a  tax?  A  Ir 
pays  a  tax  upon  the  bank  account,  the  merchandise  in  store  and 
the  personal  property  that  we  have  in  New  York. 

Q.  Do  you  remember  the  gross  amount  upon  which  you  are 
taxed  for  personal  property?  A.  No,  sir;  I  paid  it  simply  as  it 
was  presented  to  me  each  time. 

Q.  About  what  proportion  does  it  bear  to  the  total  capital 
stock  of  your  company;  your  capital  stock,  you  say,  is  $10,000.000? 
A.  Yes,  sir;  that  we  pay  taxes  on  that  in  all  States  in  the 
Union. 

Q.  I  ask  you  as  to  the  personal  property  you  are  assessed  upon 
in  the  State  of  New  York,  what  proportion  does  that  bear  to  your 
entire  capital  stock  of  $10,000,000?  A.  I  can  not  say  as  to  that. 

Q.  Can  you  give  us  any  idea?  A.  No;  I  can  not  give  you  any 
idea  at  all. 

Q.  Do  you  pay  any  tax  whatever  on  your  capital  stock  through 
the  State  of  New  York  directly?  A.  No,  sir. 

Q.  Or  upon  any  dividends  declared  by  you?     A.  No,  sir. 


536 

Q.  What  is  the  amount  of  the  annual  sales  conducted  throu< 
the  office  in  the  city  of  New  York  of  your  company?    A.  I  do 
know ;  I  do  not  have  much  to  do  with  that  part  of  the  business. 

Q.  Haven't  you  any  idea  of  the  business  of  your  company? 
I  have  an  idea  of  the  business  of  my  company  in  a  general  wai 
but  as  to  that  I  do  not  know. 

Q.  In  round  numbers  what  is  the  amount  of  business  tran 
sacted  through  the  office  in  New  York?  A.  I  don't  know. 

Q.  Haven't  you  any  idea?     A.  No,  sir;  I  have  not. 

Q.  Do  you  do  any  business?    A.  I  do  not  do  any  business  of  tl 
company  whatever;  as  I  told  you  I  am  the  secretary  and  1< 
after  that  part  of  it. 

Q.  What  are  your  duties  as  secretary?  A.  The  duties  are  laid 
down  in  the  by-laws  to  attend  the  annual  meetings,  the  meetings 
of  the  board  of  directors,  and  keep  a  faithful  record  of  the  book? 
xind  accounts;  that  is  near  as  I  can  remember  the  duties  as  laid 
down. 

Q.  Do  you  also  act  as  treasurer?    A.  Yes,  sir. 

Q.  You   are  the  chief  disbursing  officer  of  the  company? 
Yes,  sir. 

Q.  And  yet  you  can  not  give  us  any  idea  of  the  amount 
receipts  of  your  business  or  the  business  done  through  the  office 
in    New   York?     A.    I   can   not    give   you    anything   as    to    the    | 
factories,  wherever  they  may  be. 

Q.  I  am  not  asking  through  the  factories;  I  am  asking  the 
annual  amount  of  sales  through  the  New  York  office?  A.  I  do 
not  know. 

l>y  the  Chairman. 

Q.  Could  you  furnish  the  committee  with  a  statement  to  that 
effect,  if  you  had  time,  as  to  the  amount  of  sales  done  through 
the  New  York  office?  A.  Yes;  I  can  do  that. 

Q.  How  long  would  it  take  you?  A.  To  go  down  to  20  Broad- 
way and  come  back  again. 

The  Chairman. —  I  was  just  going  to  suggest  to  counsel  that  we 
should  excuse  Mr.  Burns  until  to-morrow  morning,  and  then  he 
could  furnish  us  with  that  information. 


537 


By  Mr.  Hamilton. 

Q.  I  would  like  to  have  a  statement  of  the  sales  and  purchases 
made  through  your  office  in  New  York  during  the  current  year, 
or  say  1892?  A.  I  don't  think  any  purchases  were  made  in  New 
York;  yes;  Queens  county  is  in  New  York  State;  that  is  so. 

By  Mr.  Ainsworth. 

Q.  You  say  you  pay  taxes  for  personal  property  in  this  State? 
A.  Yes,  sir. 

Q.  What  part  of  the  State?    A.  Here  in  the  city  of  New  York. 
Q.  Any  in  Buffalo?    A.  The  manager  attends  to  that  there. 
Q.  You  don't  know?    A.  I  don't  know. 

By  Mr.  Ahearn. 

Q.  Does  your  company  own  any  works  on  South  street?  A. 
Yes,  sir. 

Q.  They  own  that  property?    A.  Yes,  sir. 

Q.  Didn't  I  understand  you  to  say  that  you  didn't  own  any 
real  estate  in  New  York  city?  A.  I  made  a  mistake;  they  do 
own  it. 

Q.  That  is  quite  a  good  lot?  A.  Yes,;  there  is  quite  a  piece  in 
it;  I  don't  know  what  taxes  they  pay  on  it. 

Q.  You  do  the  bulk  of  your  business  there  in  the  city  of 
NewT  York?  A.  In  the  city  of  New  York;  yes,  sir. 

Q.  And  employ  quite  a  number  of  men?  A.  Yes;  we  employ 
a  great  number  of  laborers. 

Q.  That  was  formerly  the  old  Duryee  Starch  Company?  A. 
Yes,  sir. 

By  the  Chairman. 

Q.  Did  any  of  the  existing  corporations  for  the  manufacture 
of  starch  go  out  of  business  at  the  time  of  the  incorporation  of  the 
new  company?  A.  They  all  did. 

Q.  Those  you  took  in  went  out  of  existence?    A.  Yes,  sir. 

Q.  Did  the  same  manufacturing  establishments  continue  under 
the  new  name  in  the  same  locations?    A.  Yes;  the  same  locations, 
but  they  were  revamped  and  we  spent  a  lot  of  money  in  making 
over  and  putting  our  men  in. 
03 


538 

Q.  I  understand,  but  the  same  establishments  that  were  manu- 
facturing starch  before  continued  in  the  same  localities  in 
manufacture  of  starch  under  the  new  name?    A.  Yes,  sir. 

Q.  Do  you  manufacture  the  several  brands  of  starch  manufc 
tured  before  and  under  the  same  name,  or  is  it  all  under  01 
name?  A.  Where  we  bought  the  trade-marks,  of  course,  we  use 
the  trade-marks  with  our  name  on  it,  the  National  Starch  Manu- 
facturing Company,  successor  to  the  Glen  Cove  Starch  Works. 

Q.  So  that  the  only  change  really  is  that  it  is  a  new  corporation 
and  under  the  new  management?  A.  Yes,  sir. 

Q.  But  you  continue  to  manufacture  the  same  brands  of  si 
that  were  manufactured  before  your  incorporation?    A.  No,  sii 
because  we  made  some  new  brands;  we  have  disused  some  of 
old  ones  and  closed  up  a  good  many  of  the  factories. 

Q.  You  say  your  principal  offices  are  located  in  Covingtoi 
Kentucky;  what  relative  proportion  of  employes  have  you  in 
office  compared  with  the  New  York  office?    A.  There  are  v( 
few;  there  is  only  the  secretary  there  and  the  clerk. 

By  Mr.  Ah  earn  . 

Q.  The  bulk  of  your  business  is  transacted  here  in  the  city 
New  York?    A.  Yes ;  that  is  to  say,  the  routine  work  of  it. 

By  the  Chairman. 

Q.  The  bulk  of  the  starch  manufactured  in  the  United  Sta1 
is  now  manufactured  by  your  corporation?    A.  No,  sir;  not  at 
we  have  very  strong  competition. 

By  Mr.  Byrnes. 

Q.  Did  your  company  take  charge  of  the  Oswego  works  also?  A. 
No,  sir. 

Q.  Were  you  secretary  and  treasurer  of  the  company  at  the 
time  of  the  organization  ?  A.  Yes,  sir. 

By  Mr.  Ainsworth. 

Q.  When  you  organized,  what  existing  factories  went  into  the 
combination?  A.  Do  you  mean  what  we  bought;  we  bought  the 
Glen  Cove,  the  Niagara,  A.  Erkenbecker  &  Co,  George 


539 


Fox,  Lockland,  The  Topeka  Starch  Company,  the  Ottumwa  Starch 
Company,  in  Iowa. 

Q.  Did  the  stockholders  of  the  existing  corporations,  the  Glen 
Cove  and  others  take  stock  in  the  new  company,?  A.  They  did; 
yes,  sir;  they  wrere  offered  cash  first  for  it.  and  then  they  came 
and  bought  the  securities  of  the  new  company. 

Q.  So  that  practically  the.  existing  corporations  and  factories 
became  stockholders  in  the  new  corporation?  A.  Yes,  sir; 
voluntarily. 

Q.  Were  there  any  other  stockholders  except  the  stockholders 
of  the  existing  corporations?  A.  Yes,  sir. 

Q.  Your  stock  was  put  upon  the  market  and  sold  ?    A.  Yes,  sir. 

Q.  These  corporations  were  each  appraised  at  a  certain  sum?  A. 
Yes,  sir. 

Q.  And  which  were  paid  over  in  stock  of  the  new  corporation  or 
in  money,  the  values  which  had  been  placed  upon  the  various 
properties?  A.  Yes,  sir. 

Q.  Did  the  Kingsf ord  come  in  with  you  ?    A.  No,  sir. 

Q.  The  capitalization  of  your  new  company  was  10,500,000?  A. 
Ten  million  five  hundred  thousand  dollars. 

Q.  Do  you  know  what  the  capitalization  of  the  existing  cor- 
porations was  at  the  time  of  the  consolidation?  A.  No,  sir;  I 
do  not. 

Q.  Have  you  any  idea?    A.  No,  sir. 

Q.  Have  you  any  idea  as  to  whether  the  capitalization  of  the 
new  corporation  was  increased  beyond  the  aggregation  of  the 
corporations  then  in  existence?  A.  I  do  not  know. 

Q.  You  do  not  know  whether  it  was  more  or  less?  A.  I  do  not 
know  anything  about  it;  I  am  an  employe  of  the  new  company. 

Q.  •  But  you  were  familiar  with  the  organization  of  the  new 
company,  weren't  you?  A.  In  a.  measure;  no;  not  the  particulars 
.of  it 

Q.  You  were  its  secretary  and  treasurer?  A.  Yes;  when  it 
reorganized. 

Q.  From  the  date  of  its  organization?    A.  Yes,  sir. 

Q.  Were  you  interested  in  any  existing  companies?  A.  No, 
sir. 


54:0 

Q.  Who  is  there  that  would  know  that  fact  as  to  whether 
your  capitalization  was  increased  or  decreased  beyond  the  aggre- 
gate of  the  capitalization  of  existing  corporations?  A.  I  do  not 
believe  anybody  knows  that;  I  do  not  suppose  anybody  has  given 
it  any  attention  at  all. 

Q.  It  must  have  entered  into  the  talk  in  organizing  the  new 
company?  A.  That  is  for  the  incorporators  of  the  company;  I 
suppose  they  would  have  done  that. 

Q.  Were  you  one  of  them?    A.  No,  sir. 

Q.  You  made  a  remark  that  you  paid  a  tax  upon  your 
10,000,000  of  capitalization  in  all  the  States  in  the  Union?  A. 
Yes,  sir. 

Q.  What  did  you  pay  in  New  York  State  on  that?  A.  I  tell 
you  I  can  not  remember. 

Q.  Do  you  pay  this  tax  direct  to  the  State  or  pay  them  to  any 
of  the  various  departments?  A.  I  can  not  ^ay  that;  I  pay  them 
as  they  are  presented. 

Q.  Do  you  know  whether  they  are  presented  by  the  local 
authorities  or  by  the  State  authorities?  A.  I  do  not. 

Q.  Do  you  pay  a  tax  of  that  amount  in  any  State  where  you 
have  no  factories?  A.  I  don't  think  I  do. 

Q.  Then  why  do  you  say  in  all  the  "States  of  the  Union?  A.  I 
mean  to  say  in  all  the  States  of  the  Union  where  we  have  oui 
companies. 

Q.  Wherever  your  factories  are?    A.  Yes,  sir. 

Q.  The  only  tax  you  pay  to  the  State  of  New  York  upon  per- 
sonal property  is  the  personal  property  your  company  is  subjed 
to  in  New  York  where  your  office  is?    A.  I  don't  know  aboul 
that;  the  details  of  it  I  do  not  know. 

Q.  What  proportion  of  your  $10,500,000  capitalization  is  rep- 
resented by  real  estate?  A.  Bonds  were  issued  for  $4,500,000 
represent  seventy-five  per  cent  of  the  appraised  value  of  the 
property. 

Q.  Of  the  real  estate?     A.  On  the  real  estate. 

Q.  Then,  about  $6,000,000  would  be  the  appraised  valuation  ol 
the  real  estate?  A.  Yes,  sir. 


541 


Q.  And  an  issue  of  $4,500,000  of  bonds  represents  seventy-five 
per  cent  of  that?  A.  Yes,  sir. 

Q.  If  |4,500,000  represents  seventy-five  per  cent  of  your  real 
estate  valuation,  then  twenty-five  per  cent  of  your  capital  stock 
must  represent  the  remainder  of  your  real  estate?  A.  Yes,  sir. 

Q.  Then  seventy-five  per  cent  of  $10,500,000  must  represent  per- 
sonal property  in  some  form  or  other?  A.  I  beg  pardon;  I  did 
not  follow  that. 

(Question  repeated.) 

A.  Yes;  I  suppose  so. 

Q.  Now,  upon  that  seventy-five  per  cent  of  $10,000,000  where 
are  you  assessed  upon  that  personalty?  A.  I  say  in  all  States 
wherever  the  property  is. 

Q.  Do  you  have  any  personal  property  assessment  in  the  county 
in  which  the  Glen  Cove  factory  is  situated?  A.  I  don't  know. 

Q.  You  understand  the  law  what  a  corporation  is  assessed 
upon  the  personal  property  at  the  place  where  its  offices  for  the 
transaction  of  its'  business  is?  A.  Yes,  sir. 

Q.  The  Glen  Cove  factory  is  no  longer  in  existence?  A.  No, 
sir. 

Q.  Then  there  can  be  no  personal  property  assessment  on  that 
property  there?  A.  No,  sir. 

Q.  The  Niagara  factory  no  longer  exists?    A.  No,  sir. 

Q.  Then  there  can  be  no  assessment  upon  any  part  of  the 
personal  property  in  the  county  of  Erie?  A.  Upon  the  old 
Niagara  Starch  Company? 

Q.  Yes?    A.  No. 

Q.  There  can  be  no  assessment  under  the  law  upon  any  part 
of  your  personal  property  in  Erie  county  because  your  principal 
office  is  not  situated  there?  A.  No  sir. 

Q.  Your  home  office  is  not  in  the  city  of  New  York?  A.  No, 
sir. 

Q.  There  can  be  no  assessment  upon  your  personal  property 
in  the  county  of  New  York?  A.  That  is  the  way  I  argued  it  out, 
but  I  am  paying  it  all  the  same;  I  paid  it  last  year,  and  I  received 
a  notice  a  short  time  ago  for  the  personal  property  this  year. 

Q.  Can  you  give  us  any  idea  of  the  amount?  A.  I  have  an  idea 
it  is  $50,000  to  $60,000. 


542 

Q.  Of  personal  property?    A.  Personal  property. 

Q.  Then  as  near  as  you  can  estimate  it  whatever  personalit 
is  represented  by  seventy-five  per  cent  of  your  capital  stock  is  n( 
assessed  anywhere  unless  you  pay  a  little  of  it  here  in  the  oil 
of  New  York;  I  am  not  trying  to  get  into  your  private  business? 
A.  No;  I  suppose  not. 

By  the  Chairman. 

Q.  The  committee  would  like  to  have  vou  tell  them  just  in 
what  way  you  think  under  the  operations  of  the  statutes  of  the 
State  of  New  York  you  have  been  made  so  uncomfortable  as 
drive  you  to  another  State?  A.  We  were  not  driven  to  anoth< 
State;  we  never  organized  here. 

Q.  But  the  natural  choice  would  have  been  to  remain  under  tl 
laws  of  the  State  of  New  York  if  you  could  have  been  just 
comfortable  here  as  elsewhere?    A.  I  think  it  would,  but  I  don? 
know  anything  about  that  as  I  was  not  one  of  the  incorporate] 

Q.  Why  did  you  select  the  State  of  Kentucky  to  organize  ii 
A.  I  do  not  know;  I  did  not  organize  the  company. 

Q.  And  you  never  heard  any  suggestion  as  to  why  the  Sta1 
of  Kentucky  was  selected?  A.  I  do  know  about  that;  it  seems  t< 
me  I  heard  an  idea,  that  it  was  because  it  was  a  State  allowed 
two  pref erred  stocks,  and  the  laws  of  that  State  permitted  that, 
and  the  other  States  did  not 

Q.  Nearly  one-half  of  your  capital  stock  is  represented  by  the 
bonds,  isn't  that  so?  A.  No;  the  capital  stock  is  $10,500,000;  the 
bonds  are  a  first  lien  on  the  property. 

Q.  Then  you  have  first  and  second  preferred  stock  in  addition 
to  the  bonds?  A.  Yes;  and  common  stock. 

Q.  Then  what  amount  of  common  stock  do  you  have?  A.  Five 
million  dollars. 

Q.   Has   your   corporation   declared   any   dividends   since   its 
organization?    A.   Yes,   sir. 

Q.  How  many?  A.  It  paid  interest  on  the  bonds,  and  it  paid 
the.  dividends  on  our  first  preferred  stock  of  eight  per  cent,  and 
twelve  per  cent  on  the  second  preferred  stock. 

Q.  Any  on  the  common  stock?  A.  One  per  cent  on  the  common 
stock. 


543 


Q.  Can  you  tell  the  committee  what  proportion  of  the  stock 
is  what  is  recognized  as  treasury  stock?  A.  Yes;  as  I  say  I  con- 
sider this  thing  confidential,  and  I  do  not  think  it  is  right  to  make 
public  in  the  newspapers  all  these  things;  we  have  in  the  treasury 
14,500,000  we  should  issue,  we  have  issued  f 3,837,000  and  we  have 
in  the  treasury  $603,000;  on  the  first  preferred  stock  the  capital 
would  be  3,000,000;  we  have  issued  $2,219,000  and  have  in  the 
treasury  $780,000;  second  preferred  stock  $2,500,000,  we  have 
issued  $1,340,800,  and  have  in  the  treasury  $653,200;  on  the  com- 
mon stock  out  of  $5,000,000  we  have  issued  $4,450,700,  and  have 
in  the  treasury  $349,300. 

By  Mr.  Ahearn. 

Q.  Isn't  all  of  your  manufacturing  done  in  Glen  Cove?  A. 
No,  sir. 

Q.  The  bulk  of  it  is?    A.  No,  sir. 

Q.  That  is  the  principal  factory,  isn't  it?  A.  No,  sir;  it  is  one 
of  the  largest. 

Q.  It  is  shipped  from  there  to  your  warehouses  in  South  street? 
A.  Part  of  it  is  and  part  of  it  is  not. 

Q.  Most  of  the  manufacturing  done  at  Glen  Cove  is  sent  to 
that  warehouse?  A.  Yes,  sir. 

Q.  To  supply  the  city  of  New  York  and  the  State  of  New  York? 
A.  Yes;  it  goes  all  through  the  State;  that  is  the  natural  outlet 
for  it. 

By  Mr.  Malby. 

Q.  Where  are  your  other  factories  located?  A.  In  Topeka,  in 
Ottawa  - 

Q.  I  mean  in  New  York  State?    A.  In  Buffalo. 

Q.  Is  the  product  of  that  factory  shipped  here?  A.  I  don't 
know  where  that  is  shipped;  I  am  not  familiar  with.  that. 

Q.  Can  you  tell  me  whether  any  of  it  is  sold  from  the  factory; 
have  you  any  business  office  there?  A.  Yes,  sir. 

Q.  That  is  other  than  the  business  office  that  controls  the 
management  of  the  firm;?  A.  Any  other  business  offices? 


544 

Q.   Yes;   than   controls   the   simple   manufacturing?    A. 
manager  runs  the  factory. 

Q.  Have  you  any  salehouses  there;  do  you  sell  any  starch  fi 
Buffalo?    A.  Yes,  sir. 

By  the  Chairman. 

Q.  Where  are  your  orders  first  placed;  in  the  New  York  offi< 
A.  No,  sir ;  they  are  first  placed  with  the  manager  of  the  company. 

Q.  Can  an  order  for  starch  be  placed  at  the  Buffalo  manufactoi 
direct?  A.  Yes,  sir;  a  man  would  naturally  send  to  that  offi( 
to  buy  it. 

By  Mr.  Malby. 

Q.  Would  the  communication  be  addressed  to  *the  National 
Starch  Company?  A.  To  the  National  Starch  Company. 

Q.  And  not  to  the  name  of  the  old  company?    A.  No,  sir. 

Q.  Has  the  price  of  starch  gone  up  any  since  the  organization  of 
your  company?  A.  No,  sir;  the  price  of  starch  is  lower  now  than 
it  ever  was  before. 

Q.  Can  you  tell  whether  under  the  laws  of  the  State  of  Kentucky 
you  pay  any  tax  on  your  capital  stock  or  dividends?  A.  We 
do  not. 

Q.  Have  you  filed  any  certificate  in  the  State  of  New  York?  A 
Yes,  sir;  in  the  secretary's  office. 

Q.  And  your  principal  business  is  done  in  the  State  of  New 
York?  A.  No;  our  principal  business  —  the  New  York  business 
is  done  in  New  York. 

Q.  Is  that  your  principal  business;  that  is  the  larger  proportion? 
A.  The  larger  proportion  is  done  in  the  State  of  New  York; 
yes,  sir. 

By  the  Chairman. 

Q.  And  orders  from  all  parts  of  the  country  are  placed  and 
filled  in  the  State  of  New  York?  A.  No,  sir. 

Q.  Is  all  the  product  of  your  manufacturing  establishments  in 
the  State  sold  within  the  State?  A.  No,  sir;  it  extends  all  over 
the  country. 


54:5 

Q.  That  is  what  I  mean;  that  you  receive  orders  in  New  York 
from  all  over  the  country?  A.  Yes,  sir;  for  the  New  York  —  for 
instance,  the  New  York  branch  of  it. 

William  W.  Childs,  called  as  a  witness,  being  duly  sworn,  tes- 
tified as  follows : 

By  Mr.  Hamilton. 

Q.  Where  do  you  live?    A.  Brooklyn. 

Q.  And  you  are  treasurer  of  the  American  Manufacturing 
Company?  A.  No,  sir;  I  am  acting  secretary.. 

Q.  What  is  the  business  of.  the  American  Manufacturing  Com- 
pany? A.  The  manufacturing  of  jute-bagging  for  baling  cotton. 

Q.  Under  the  laws  of  what  State  are  they  incorporated?  A. 
The  laws  of  West  Virginia. 

Q.  How  long  have  they  been  so  incorporated?  A.  On  that 
point  I  will  have  to  state  my  opinion  that  it  is  about  five  years; 
I  have  only  been  with  them  a  little  while,  and  I  am  not  sure. 

Q.  Do  you  know  whether  prior  to  that  they  or  any  constituent 
part  of  that  corporation  was  incorporated  under  the  laws  of  the 
State  of  New  York?  A.  No,  sir;  they  never  were. 

Q.  Where  is  their  business  carried  on?  A.  In  the  south;  that 
is,  their  sales  are  made  in  the  south. 

Q.  Where  is  their  bagging  manufactured?  A.  At  Charleston, 
South  Carolina,  St.  Louis  and  Brooklyn. 

Q.  Where  is  the  principal  office  of  the  corporation  for  the 
transaction  of  business?  A.  The  selling  agents  are  at  St.  Louis, 
and  they  control  and  sell  the  entire  product  of  the  manufactory, 
although  we  have  an  office  in  New  York. 

Q.  Where  is  your  office  in  New  York?  A.  Sixteen  to  eighteen 
Exchange  place. 

Q.  Where  are  your  purchases  nfade  for  the  transaction  of  your 
business?  A.  Principally  here. 

Q.  Principally  in  the  <-ity  of  New   York?     A.  Yes,  sir. 

Q.  What  is  the  capital  stock  of  your  company?  A.  The  paid  up 
(capital),  I  think  is  $2,300,000. 

Q.  What,  if  any,  taxes  are  paid  by  your  company  in  the  State 
New  York  or  to  any  of  the  counties  in  the  State?  A.  We  pay 
69 


546 


only  a  personal  property  tax  in  the  city  of  New  York  for  our 
office  furniture. 

Q.  To  what  amount?     A.  Five  hundred  dollars;  a  nominal 

Q.  That  is  upon  the  value  of  $500?    A.  Yes,  sir. 

Q.  Then  I  believe  you  also  pay  the  tax  upon  your  property 
Brooklyn?     A.  We   do  not  own    the  property;    the  taxes 
assessed  upon  the  property  we  lease. 

Q.  Is  that  a  part  of  the  rental?    A.  Yes,  sir. 

Q.  Other  than  that  you  pay  no  taxes  whatever?    A.  No,  sir. 

By  Mr.  Malby. 

Q.  Did  I  understand  you  to  say  that  your  principal  office  w 
at  St.  Louis?  A.  I  say  principal  in  this  respect,  that  the  largest 
mills  are  there  and  the  selling  agents  who  control  the  entire 
product  of  the  three  mills  are  there. 

Q.  Why  was  the  company  organized  under  the  laws  of  the 
State  of  West  Virginia?  A.  1  can  not  give  you  an  intelligent 
answer  to  that;  1  have  heard  the  matter  talked  over,  but  thct 
was  before  my  connection  with  the  company. 

Q.  Do  you  understand  that  the  laws  are  much  more  favorable 
there  than  here?  A.  I  have  heard  so,  but  I  do  not  know  about 
that. 

Q.  Do  you-  control  nearly  the  entire  manufacture  of  jute  bag- 
ging? A.  Our  opponent  would  hardly  admit  that  fact. 

Q.  What  do  you  say  about  it?  A.  I  should  say  that  probably 
we  manufacture  forty  per  cent;  I  have  heard  that,  and  I  believe 
it  to  be  true. 

Q.  How  many  such  corporations  are  there  doing  business?  A. 
I  can  not  say  positively;  I  think  I  have  heard  there  were  thirty. 

Q.  Is  there  any  mutual  understanding  between  you  as  to  the 
amount  to  be  manufactured  by  the  separate  establishments  or  the 
prices  to  be  received?  A.  Do  you  mean  with  other  companies? 

Q,  Yes?    A.  None  whatever. 

Q.  Have  you  ever  had?  A.  I  think  there  was  at  one  time,  but 
I  only  say  so  from  what  I  have  heard ;  it  was  before  my  connection 
with  the  company. 

Q.  How  long  have  you  been  connected  with  the  company?  A. 
Since  February,  1891. 


547 

Q.  How  do  prices  range  now,  compared  with  what  they  did  at 
that  time?  A.  They  are  much  lower. 

Q.  Is  the  raw  material  itself  cheaper?  A.  It  is  this  year;  it 
varies;  last  year  it  was  higher. 

r»y  the  Chairman. 

Q.  The  raw  material  is  a  product  of  the  south?  A.  No,  sir; 
it  is  from  Jndia,  and  we  buy  it  here. 

By  Mr.  Malby. 

Q.  Have  you  any  objection  to  stating  the  amount  of  dividends 
declared  by  your  ^comjpanv?  A.  None  whatever,  as  we  have 
never  declared  a  dividend. 

Q.  Do  you  mean  by  that  to  be  understood  that  your  company 
has  never  been  able  to  declare  a  dividend;  that  isi,  never  made 
anything  in  excess  of  your  expenses?  A.  No,  sir;  we  do  not 
mean  to  say  that;  we  probably  have  made  something  in  excess, 
but  we  have  not  made  sufficient  to  declare  a  dividend  since  my 
connection  with  the  company;  in  fact  it  has  been  a  cut-throat 
business  for  the  last  three  years,  and  while  at  one  time  it  was 
Supposed  that  the  prospect  was  we  might  make  large  profits,  we 
:havo  made  very  little. 

Q.  Owing   to  competition?    A.  Mostly. 

Q.  You  say  your  paid-up  capital  is  $2,800,000?    A.  Yes,  sir. 

Q.  What  is  the  entire  capital  of  your  company?  A.  We  are 
; authorized  to  have  a  capital  of  $5,000,000,  but  our  paid-up  capital 
represents  stock  in  the  business. 

By  the  Chairman. 

Q.  Do  you  call  the  balance  treasury  stock?    A.  No,  sir. 
Q.  It  has  never  been  issued?    A.  Never  been  issued. 
Q.  Did  the  creation  of  your  corporation  result  in  the  consolidation 
)f  several  other  corporations?    A.  It  did  in  the  consolidation  of 
two  corporations;  perhaps  I  might  say  of  three;  two  companies  in 

Louis  and  one  in  Charleston. 

Q.  Where  is  the  great  bulk  of  your  business  transacted?    A. 
over  the  south;  probably  the  State  of  Texas  does  more  than 
IT  other. 


548 


.. 


Q.  But  through  what  office  or  business  house  is  it  done?  A, 
More  through  our  selling  agents  in  St.  Louis  than  anywhere 

Q.  To  what  office  do  they  account?  A.  Our  treasurer  lives 
St.  Louis,  and  has  entire  control  and  charge  of  the  finances,  but 
under  him,  as  the  acting  secretary  and  cashier,  I  transact  part 
of  the  business  here  in  New  York. 

Q.  Do  the  selling  agents,  for  instance,  in  St.  Louis,  accoi 
to  the  St.  Louis  office  or  to  the  New  York  office  direct?    A. 
account  to  the  New  York  office,  but  they  retain  the  funds  th( 
principally. 

Q.  But  the  business  is  really  done  here?    A.  It  is  done  h( 
on  paper. 

Q.  What  officers  of  your  corporations  reside  within  the  State 
of  New  York,  if  any?  A.  One  of  the  directors  and  myself  are 
the  only  ones. 

By  Mr.  Malby. 

Q.  Is  the  business  conducted  at  St.  Louis  for  the  purpose 
avoiding  taxation  in  New  York?  A.  No,  sir;  not  at  all;  the  busi- 
ness was  originally  carried  on  in  St.  Louis,  and  the  office  was  in 
New  York  because  this  is  the  point  where  we  are  brought  into 
immediate  contact  with  the  importers. 

By  the  Chairman. 

Q.  This  is  the  great  commercial  center?  A.  For  the  purchase 
of  supplies;  there  is  no  advantage  to  us  in  coming  here  for  the 
purpose  of  selling,  but  for  the  purchase  of  supplies  there  is  an] 
advantage. 

Q.  What  proportion  of  your  product  is  manufactured  in  the  city 
of  Brooklyn?  A.  A  very  little  proportion  as  yet,  inasmuch  as  we 
have  been  constructing  the  mill  which  is  not  yet  completed. 

Q.  It  is  a  new  venture?    A.  Yes,  sir. 

Elisha  M.  Fulton,  Jr.,  called  as  a  witness,  being  duly  sworn,: 
testified  as  follows: 

By  Mr.  Hamilton. 

Q.  Where  do  you  live?    A.  In  New  York. 
Q.  Are  you  connected  with  the  National  Cordage  Company? 
Yes,  sir. 


549 

Q.  In  what  capacity?    A.  As  director  now. 

Q.  How  long  have  you  been  acting  as  director  of  that  company? 
A.  About  two  years. 

Q.  That  company  is  organized  under  the  laws  of  the  State  of 
New  Jersey?  A.  Yes,  sir. 

Q.  How  long  has  it  been  so  incorporated?    A.  Since  1885. 

Q  And  its  capital  stock  Is?    A.  Twenty-five  millions. 

Q.  Was  it  at  any  time  or  any  of  the  preceding  corporations 
merged  into  it  incorporated  under  the  laws  of  the  State  of  New 
York?  A.  I  think  so;  I  think  there  was  one. 

Q.  What  one  was  that?  A.  I  think  it  was  Tucker,  Carter 
&  Co. 

Q.  Your  company  has  an  office  for  the  transaction  of  business 
In  tho  State  of  New  York?  A.  Yes,  sir. 

Q.  Whereabouts?  A.  One  hundred  and  thirty-five  Front  street, 
New  York  city. 

Q.  How  long  has  it  maintained  that  office?  A.  Since  the 
[organization  of  the  company. 

Q.  And  what  business  is  transacted  with  that  office?  A.  The 
j transfer  of  stock  and  part  of  the  general  business  of  the  company. 

Q.  Is  that  the  principal  business  office  of  your  company?  A. 
sir. 

Q.  And  has  been  since  its  organization?    A.  Yes,  sir. 

Q.  How  many  of  the  officers  of  your  company  are  residents  of  the 

lie  of  New  York?    A.  That  I  could  not  tell  you. 

Q.  Can  you  give  an  estimate?    A.  Officers  or  directors)? 

Q.  Officers  and  directors,  calling  the  directors  officers?    A.  I 

ink  out  of  nine  directors  five  are  residents  of  New  York. 

By  the  Chairman. 

Q.  Where  does  the  president  live?    A.  New  York. 
Q.  Vice-president?    A.  New  York. 
Q.  Secretary?     A.  I  don't  know  who  is  secretary. 
Q.  Treasurer?     A.  Cincinnati. 

Q.  Are  there  any  other  officers  of  the  company?     A.  I  think 
lere  is  an  assistant  treasurer. 


550 


Q.  Have  you  a  managing  director?    A.  I  think  there  was  at 
one  tune;  he  was  never  fixed  in  the  office;  that  is  he  has  ne 
attended  in  the  office. 

Q.  Where  does  he  reside?    A.  In  New  York;  I  think  tha 
Mr.  Wallace  now. 

T.y  Mr.  Hamilton. 

Q.   What  is  the  business   carried  on  by  your  company? 
Cordage. 

Q.  And  where  are  its  factories  located?    A.  In  the  west,  11 
New  York,  in  New  Jersey,  Pennsylvania,   Ohio,  Massachusetts, 
Illinois,  and  several  more  of  the  western  States  I  don't  know. 

Q.  Where  is  it  carried  on  in  the  State  of  New  York?  A. 
Brooklyn. 

Q.   What  is  the  total  output  of  your  company?     A.   In 
neighborhood  of  125,000  tons  a  year. 

Q.   What   proportion   of   that   is   from   the   factories   also 
Brooklyn?    A.  I  think  about  15,000  tons. 

Q.  You  say  you  have  factories  also  in  New  Jersey?  A.  We 
only  have  one  now.  a 

Q.  toiat  is  the  only  connection  then,  in  fact,  which  your  cor- 
porations has  with  the  State  of  New  Jersey;  that  is  it  has  no 
factory    doing   business   incorporated    under   the   laws   of    that 
State?    A.  Our  largest  mill  burned  down  there  since  our  incor 
poration  about  a  year  and  a  half  ago. 

Q.  That  has  not  been  rebuilt?  A.  Not  as  yet  been  rebuilt 
and  1  think  I  will  have  to  correct  myself,  the  other  factory  I  was 
thinking  of  is  in  Beading. 

Q.  Then  at  the  present  time  there  is  no  factory  in  New  Jersey? 
A.  No,  sir;  not  at  the  present  time. 

Q.  And  has  not  been  for  a  year  and  a  half  past?  A.  About 
that 

Q.  What  business  then  does  your  company  transact  in  the 
State  of  New  Jersey,  what  proportion?  A.  We  sell  our  output 
there. 

Q.  You  do  that  in  every  State  in  the  nation,  don't  you;  sell 
your  output?  A.  Almost. 


551 

Q.  What  further  business  other  than  the  sale  of  your  output 
is  carried  on  in  the  State  of  New  Jersey  by  your  corporation? 
A.  I  don't  know  of  any. 

Q.  What  real  estate  do  you  own  in  the  State  of  New  York? 
A.  We  own  those  factories  in  Brooklyn. 

Q.  Any  other?    A.  Not  to  my  knowledge;  there  may  be. 

Q.  What  taxes  do  you  pay  upon  your  personal  property  or  upon 
your  corporate  business  in  New  York?  A.  I  have  no*  the 
slightest  idea. 

Q.  You  act  simply  as  a  director  of  the  company?  A.  Yes,  sir; 
and  I  do  not  even  go  down  there  at  all. 

Q.  Have  you  anything  to  do  with  the  books  of  the  company? 
A.  Nothing  at  all. 

Q.  Did  you  act  in  any  clerical  capacity  at  all?  A.  No,  sir;  I 
do  not  go  to  the  office  once  in  three  months. 

Q.  What  officer  of  your  company  has  charge  of  that  department 
A.  Mr.  Loper,  I  suppose,  in  the  department  of  books. 

Q.  No;  I  mean  the  department  which  superintends  the  pay- 
ment of  taxes?  A.  I  think  Mr.  Loper. 

Q.  What  is  Mr.  Loper's  full  name?    A.  G.  W.  Loper. 

Q.  And  Mr.  Loper's  office  is  where?  A.  One  hundred  and 
thirty-five  Front  street. 

Q.  Mr.  Loper  resides  where?    A.  Cincinnati. 

Q.  Is  he  in  New  York  now?    A.  Yes,  sir. 

Q.  You  are  not  able  to  give  us  any  information  whatever  as  to 
the  taxes  of  the  company?  A.  I  haven't  the  slightest  idea  of  it. 

Q.  Is  your  father  an  officer  of  the  company?    A.  No,  sir. 

Q.  He  was  an  officer?    A.  Yes,  sir. 

Q.  What  office  did  he  hold  in  connection  with  it?    A.  He  was 

ii 

treasurer  for  a  number  of  years,  and  then  for  a  very  short  time 
he  was  financial  director;  I  think  that  is  the  office  he  had. 

Q.  He  has  ceased  to  act  in  either  of  these  capacities  at  the 
present  time?  A.  Yes,  sir;  and  has  for  some  time. 

By  Mr.  Ainsworth. 
Q.  Have  you  any  bonded  indebtedness    A.  I  don't  know. 


552 

By  1ho  Chairman. 

Q.  Can  you  tell  the  committee  why  the  National  Cordage  Coi 
pany  elected  to  incorporate  under  the  laws  of  the  State  of  N< 
Jersey?  A.  i  can  not;  that  was  before  my  connection  with  it. 

Q.  I  think  you  have  already  testified  that  the  bulk  of  your 
business  is  done  here  in  the  city  of  New  York  or  done  from 
city  of  New  York?     A.  The  books  and  that  sort  of  thing  mi 
the  general  office  business  may  be  done  here,  and  yet  I  don't  kn 
that  that  is  the  ease  now;  I  believe  a  great  deal  is  done 
Illinois. 

Q.  That  is,  your  output   goes  there?    A.  No;   I  mean  offi< 
where  the  books  are  kept. 

Q.  The  head  offices  are  in  the  city  of  New  York?    A.  Yes,  si 

Q.  And  this  is  really  the  home  of  the  company  except  for 
fact  that  they  are  incorporated  under  the  laws  of  the  State 
New  Jersey?    A.  Yes;  I  should  think  so. 

Q.  What   is   the  capital   of  the   company?    A.  Twetaty-fr 
millions. 

Q.  Has  it   been  recently   increased?    A.Yes,   sir. 

Q.  What  was  it  originally?    A.  Fifteen  millions;  when  it  wj 
first  incorporated  I  think  it  was  only  five;  it  had  been  for  soi 
two  years  fifteen. 

By  Mr.  Byrnes. 

,Q.  How  many  factories  have  you  in  Brooklyn?     A.  I  beli< 
there  are  four. 

Q.  And   they   were   consolidated?    A.  Yes,   sir. 

By  Mr.  Malby. 

Q.  Are  there  any  other  companies  doing  the  same  business 
in  the  "United  States?  A.Yes,  sir. 

Q.  What  proportion  of  the  entire  busines's  does  your  com- 
pany do?  A,  I  think  they  do  a  larger  proportion  of  the  business 
now  than  when  I  was  here;  when  I  was  in  the  office  and 
knew,  I  think  wTe  did  about  two-thirds. 

Q.  And  you  think  they  do  a  larger  amount  now?  A*  I  thinlc 
possibly  they  may  do  a,  little  larger  now. 


553 


Q.  Is  the  capital  of  25,000,000  paid  up?     A.  Yes,  sir. 

Q.  Can  yon  tell  us  what  the  amount  of  your  dividends  have 
been  within  the  past  two  or  three  years?  A.  The  gross  amount? 

Q.  Each  year?  A.  They  have  been  paying  eight  per  cent  on 
their  preferred  and  ten  per  cent  on  the  common;  that  is  on 
15,000,000. 

By  the  Chairman. 

Q.  They  have  not  declared  a  dividend  on  the  recent  increase? 
A.  That  was  only  done  within  two  or  three  weeks. 

By  Mr.  Malby. 

Q.  Can  you  tell  us  what  the  stock  is  worth  in  the  market?  A. 
Seventy-four  and  one-half;  that  is  the  new  stock  after  the  common 
was  doubled. 

William  M.  Htiagland,  called  as  a  witness,  being  duly  sworn, 
testified' as  follows: 
By  Mr.  Hamilton. 

Q.  Wherf  do  you  reside?     A.  In  Brooklyn. 

Q.  You  are  the  treasurer  of  the  Royal  Baking  Powder  Com- 
pany? A.  I  am. 

Q.  A  corporation  organized  under  the  laws  of  the  State  of 
New  York?  A.  Yes,  sir. 

Q.  With  a  capital  stock  of  how  much?  A.  One  hundred  and 
sixty  thousand  dollars. 

Q.  How  long  has  it  been  so  incorporated?     A.  Since  1873. 

Q.  Was  it  at  any  time  incorporated  under  the  laws  of  any 
other  State?  A.  1  don't  know. 

Q.  How  long  have  you  been  connected  with  it?  A.  Eight 
years. 

Q.  Then  it  was  not  during  your  period  of  service  in  the  com- 
pany? A.  No,  sir;  I  think  it  neA'er  was. 

By   the   Chairman. 

Q.  The  committee  know  that  the  Royal  Baking  Powder  Com- 
pany is  acting  under  the  laws  of  the  State,  and  we  suppose  that 
you  are  satisfied  with  the  conditions?  A.  There  is  one  thing  I 


554 


would  like  to  say  in  reference  to  corporations  organized  under 
the  laws  of  other  States;  such  experience  as  I  have  had  in  th 
case  when  taxes  have  been  levied  upon  those  corporations  it 
always  been  with  a  >  sentiment  of  retaliation  in  other  States; 
great  many  corporations  who  have  formed  under  the  laws 
New  York  would  therefore  suffer  in  other  States  in  case 
taxation  should  be  made  too  heavy  upon  corporations  doi 
business  in  other  States;  my  sentiment  has  been  made  up  of  the 
fact  that  taxation  should  be  very  lenient  over  corporations  that 
are  not  organized  in  the  State  of  New  York,  for  whatever  reason 
they  may  have  removed  or  have  fomied  und'er  other  laws. 

By  the  Chairman. 

Q.  What  would  you  say  to  so  amending  the  laws  as  to  ti 
foreign  corporation  in  this  State  just  as  we  treat  our  domesl 
corporations,  to  put-  them  exactly  on  the  same  footing?  A. 
believe  that  the  great  prosperity  of  this  country  is  due  in  one  cans 
to  the  fact  that  we  'have  so-called  free  trade  among  the  different, 
States  of  this  union,  and  corporations  organized  in  the  different 
States  should,  in  my  opinion,  pay  there  tax  there  and  if  those  States 
did  not  see  fit  to  insist  upon  levying  the  tax  that  is  not  our  lookout. 

Q.  Don't  you  look  upon  it  as  a  shifting  of  the  burden,  that  large 
corporations  doing  business  in  this  State  can  reincorporate  under 
the  laws  of  other  States  and  thereby  escaped  their  contribution  to- 
the  support  of  the  other  States?  A.  Doesn't  that  show  that  we  are 
levying  a  tax  in  this  State  that  is  burdensome,  which  should  not 
be  put  upon  the  corporation? 

By  the  Chairman. 

Q.  Isn't  it  a  burden  to  your  corporation  as  well?    A.  Yes,  sir. 
Q.  How  is  it  then  you  can  live  under  it  and  they  can   not?    A. 
We  could  live  better  under  it  if  they  did  not  exist. 

By  the   Chairman. 

Q.  Do  you  find  it  oppressive  with  your  company  to  pay  the  tax  in  I 
this  State?  A.  I  think  the  taxation  upon  the  corporations  are  j 
oppressive,  and  I  am  perfectly  free  to  say  to  you  that  it  has  been 

- 


555 


talked  over  among  our  directors  whether  or  not  we  should  £p  out 
from  under  the  form  of  corporation,  whether  we  slwmld  not  i>o  back 
to  a  partnership. 

By  Mr.  Guenther. 

Q.  Do  you  pay  the  taxes  on  the  entire  personal  estate  owned  by 
your  corporation?  A.  Personal  estate  owned  by  the  corporation 
would  be  capital  stock,  wouldn't  it? 

By  the  Chairman. 

Q.  No;  your  plant  outside  of  your  real  estate,  and  all  of  your 
personal  effects  of  the  corporation  outside  of  the  stock  would  be 
personal  property?  A.  We  pay  taxes  on  all  the  personal. 

Q.  On  the  total  value?    A.  Yes,  sir. 

By  Mr.  Malby. 

Q.  Do  you  think  that  a  corporation  organized'  under  the  laws 
of  the  State  of  New  York  and  paying  taxes  here  can  compete  with 
a  company  organized  under  the  laws  of  the  State  of  West  Virginia 
where  they  do  not  pay  any  taxes  anywhere?  A.  It  depends 
entirely  upon  the  coloration  and  what  they  are  formed  for. 

By  the  Chairman, 

Q.  Doing  a  like  business?  A.  I  have  not  experience  enough  to 
say. 

By  Mr.   Guenther. 

Q.  There  are  several  corporations  engaged  in  the  same  line  of 
business  in  this  State  as  well  as  in  several  other  States  adjoining 
New  York,  and  they  combine;  several  of  the  corporations  in  this 
State  refuse  to  go  into  it;  does  that  concern,  incorporated  in  the 
State  where  there  are  no  taxes,  remembering  that  those  in  this 
State  are  incorporated  under  our  laws  and  pay  taxes  —  do  you 
think  it  is  fair  to  those  that  remain  in  this  State  to  pay  taxes  here 
and  allow  a  corporation  that  is  incorporated  in  another  State  to 
come  here  and  compete  with  those  paying  taxes?  A.  I  think  it 
is  not  fair  to  tax  the  corporation  in  New  York  while  corporations 


556 

in  other  States  do  not  have  to  pay  taxes  ;  and  for  that  reason  I  ai 
in  favor  of  a  tax  upon  — 

Q.  Do  you  understand  my  question;  suppose  there  are  sevei 
coriK>rations  in  this  State  and  the  same  kind  of  corporation  in 
other  States  adjoining  New  York,  and  engaged  in  the  same  line 
of  business;  several  of  those  in  this  State  combine  with  those  in 
adjoining  States  and  become  incorporated  in  one  State,  say,  f( 
instance,  New  Jersey  or  West  Virginia;  one  or  two  of  ihose 
engaged  in  the  same  business  in  the  State  of  New  York  refuse  to 
go  in  it;  they  continue  incorporated  in  this  State  and  pay  taxes 
iu  this  State;  it  is  fair  to  those  remaining  in  this  State  to  allow 
those  incorporated  in  other  States  and  paying  no  tax  to  come  i] 
hero  and  compete  with  them  in  the  same  line  of  business?  A. 
consider  it  fair  because  other  people  have  the  same  privileges 
they  want  to  go  out  of  New  York  and  incorporate. 

By  the  Chairman. 

Q.  What  would  you  do;  would  you  relieve  the  domestic  coi 
rations  from  taxation  or  would  you  impose  taxation  upon  th( 
foreign  corporations  doing  business  in  this  State?  A,  I  shoulc 
relieve  the  local  corporation  of  its  tax. 

By  Mr.  Guenther. 

Q.  Where  would  you  get  your  money  from  to  meet  the  expenses 
of  the  government?  A.  Do  not  want  to  know  my  opinion? 

Q.  Yes?    A.  From  real  estate. 

Q.  On  the  single  tax  idea?  A.  I  do  not  know  whether  that 
is  the  term  applied  to  such  a  belief. 

Q.  You  believe  in  taxing  the  real  estate?  AL.  Yes;  we  are 
large  holders  of  real  estate  and  would  be  willing  to  pay  our  share. 

Q.  And  you  think  personal  property  receiving  a  certain  pro- 
tection from  the  law  as  much  if  not  more  than  real  estate  should 
not  pay  any  tax  and  that  real  estate  should  bear  the  whole  burden 
of  taxation?  A.  Yes,  sir. 

Q.  Why  should  there  be  this  discrimination  in  favor  of  per- 
sonal property  as  against  real  estate?  A.  I  believe  that  the 


557 

centers  of  trade  are  more  prosperous  by  an  aggregation  of  per- 
sonal property;  I  do  not  believe  in  driving  away  personal  property 
from  New  York  by  putting  a  tax  upon  it;  we  can  give  employment 
to  labor  and  have  improvements  of  all  kinds  by  having  personal 
property  to  spend;  and  if  we  are  going  to  tax  it  and  drive  away 
we  make  people  conceal  it  so  we  can  not  get  at  it. 

By  Mr.  Ainsworth. 

Q.  Enlarge  your  views  and  take  in  the  whole  State,  and  how 
does  your  argument  apply  to  the  rest  of  the  State,  except  its  great 
cities;  would  you  make  these  people  pay  the  entire  expense  of  the 
State  government;  enlarge  your  view  beyond  the  little  island  of 
Manhattan,  and  what  you  think  about  it?  A.  I  believe  it  would 
be  fair  on  the  agricultural  interests;  I  do. 

Q.  To  let  them  pay  the  majority  of  the  taxation  in  the  State 
of  New  York;  you  say  you  do  not  believe  in  the  taxation  of  a 
corporation;  what  do  you  say  about  a  corporation  which  occupies 
a  public  street  railroad;  shouldn't  they  pay  a  tax  for  their  fran- 
chise? A.  Would  that  be  considered  a  State  tax? 

Q.  They  are  taxed  now?  A.  I  think  my  views  cover  the  whole 
subject;  if  a  street  railroad  company  will  go  to  work  and  run  the 
risk  to  get  enough  five-cent  fares  to  make  it  convenient  for  me 
to  go  to  Central  park  I  bid  them  God  speed  and  do  what  I  can 
for  them. 

Q.  You  understand  that  a  corporation  with  individual  stock- 
holders, that  their  private  estate  not  invested  is  not  liable  for  its 
debts?  A.  Yes,  sir. 

Q.  And  a  partnership  would  be?    A.  Yes,  sir. 

Q.  You  believe  that  no  tax  should  be  imposed  upon  a  corpo- 
ration for  the  exemption  from  liability  which  a  State  gives  them? 
A.  I  do  not  think  the  advantage  is  worth  what  it  is  charged. 

Q.  It  is  so  much  that  many  men  before  this  committee  have 
testified  that  they  came  to  New  York  to  organize  so  as  to  have 
that?  A.  It  may  be  among  other  corporations. 

Q.  I  am  taking  the  enlarged  view?  A.  Then  you  can  judge 
what  the  others  have  to  say. 


: 


558 

Q.  Good  business  men  in  the  city  of  New  York  have  testified 
that  they  have  come  to  New  York  to  organize  a  corporation  for 
the  purpose  of  exempting  their  private  estate  from  liability  tha 
they  would  incur  as  partners  in  doing  the  same  business;  now, 
ought  not  that  corporation  to  pay  something  for  its  privileges  or 
its  advantages?  A.  There  are  many  large  corporations  in  New 
York,  and  there  are  a  few  that  probably  that  would  be  an  advan- 
tage; I  think,  if  a  majority  of  the  corporations  in  New  York  are 
formed  in  such  a  way,  that  they  could  very  readily  return  to  their 
old  style  of  partnership,  and  the  release  from  liability  you  speak 
of  is  not  worth  what  is  now  being  charged  us  in  the  way  of 
taxation. 

By  the  Chairman. 

Q.  Do  I  gather  from  your  view  that  whatever  tax  is  im] 
upon  a  local  railroad  company  that  it  ought  to  be  local  in  11 
nature;  for  instance,  a  railroad  corporation  with  a  franchise 
New  York,  that  if  it  is  to  be  taxed  at  all  the  tax  ought  to 
local  in  its  character  and  the  city  ought  to  get  the  benefit  of  H 
is  that  the  idea?  A.  That  is  it. 

By  Mr.  Ainsworth. 

Q.  You  think  it  should  be  taxed  upon  something  beside  it 
real  estate?    A.  If  it  is  taxed  it  should  be. 


By  Mr.  Guenther. 

Q.  You  say  you  do  not  favor  the  idea  of  taxing  personal  property; 
do  you  recollect  the  trouble  we  had  in  Buffalo  during  the 
year  whereby  the  troops  were  called  out  to  protect  the  personal 
property  of  the  railroads  at  an  expense  to  the  county  of  Erie 
of  nearly  |3 00,000;  that  was  for  the  purpose  of  protecting  personal 
property;  we  real  estate  owners  in  Erie  county  must  pay  the  tax 
for  protecting  that  personal  property;  why  should  not  the  owners 
of  that  personal  property  pay  for  their  proportion  to  meet  the 
expenses  of  the  State,  the  county  and  the  city  incurred  in  its 
protection? 


559 


By  Mr.  Ainsworth. 

Q.  Why  should  the  Orange  county  farmers  pay  for 
that  entirely?  A.  As  I  have  said  before,  I  have  not  studied  the 
question  thoroughly. 

Q.  What  is  your  idea  as  to  taxing  personal  property  in  view  of 
what  I  said  occurred  in  Buffalo  last  year?  A.  I  understand 
that  is  the  only  case  of  the  kind  that  ever  occurred  in  New  York; 
it  is  an  exceptional  thing. 

Q.  But  you  see  the  law  is  that  the  county  is  responsible  for  the 
destruction  of  personal  property  during  a  riot;  you  see  the  personal 
property  has  the  protection  but  the  county  is  responsible  for  it? 
A,  It  is  a  question  whether  it  does  not  all  work  around  right 
in  the  real  estate. 

Q.  How  would  it  work  around  in  your  opinion?  A.  This  is 
not  an  inquisition,  is  it? 

Q.  No;  but  we  are  trying  to  get  your  ideas;?  A.  If  you  will 
allow  me  it  is  a  question  to  me  whether  Erie  county  has  not  been 
made  what  it  is  by  that  personal  property  that  is  there,  and 
whether  it  is  not  worth  while  to  protect  that  propery  for  the 
sake  of  making  Erie  county  what  it  is. 

By  the  Chairman. 

Q.  What  Mr.  Guenther  has  just  said  as  to  the  conditions  that 
prevail  in  Erie*  county,  about  the  State  having  to  step  in  and 
protect  railroad  property  in  the  county  of  Erie,  and  the  county  of 
Erie  having  to  make  that  good,  isn't  that  an  argument  in  favor 
of  what  I  suggested  about  the  taxation  of  railroads  being  local? 
A.  Yes;  I  think  it  is, 

Q.  It  ought  to  be  local;  if  the  county  in  which  the  railroad  is 
located  must  bear  the  expense  of  protecting  the  property  even 
by  the  State  militia,  why  then  should  not  the  return  from  that 
property  come  to  the  county  -instead  of  to  the  State?  A.  As 
you  state  the  question,  it  seems  to  me  it  should. 

F.  O.  Hanlon,  called  as -a  witness,  being  duly  sworn,  testified 
as  follows: 

By  Mr.  Hamilton. 

Q.  You  are  the  secretary  of  the  National  Lasting  Company?  A. 
The  Universal  Lasting  Company. 


560 


Q.  Is  it  a  domestic  corporation?    A.  Yes,  sir. 

Q.  With  a  capital  stock  of?    A.  One  million  dollars. 

Q.  With  the  principal  office  for  the  transaction  of  busii 
where?    A.  New  York  city. 

Q.  Have  you  any  suggestion  to  make  to  the  committee  as  to 
the  propriety  of  modifying  the  present  laws  relating  to  taxatioi 
so  far  as  they  affect  the  commercial  or  corporate  interests 
the  State?    A.  I  would  like  to  state  that  my  experience  has 
in  connection  with  the  company  which  I  represent,  in.  addition 
to  this  lasting  company,  and  we  paid  the  tax  (city);  it  does  n< 
amount  to  a  great  deal,  $500  a  year,  but  if  you  take  our  positio] 
to-day,  we  have  been  four  years  in  existence,  and  spent  probabl 
f  150,000  in  experimenting  with  a  view  to  perfecting  our  machinei 
and  we  have  not  had  one  cent  of  revenue  from  any  directioi 
whatever;  'in  that  case  I  think  there  ought  to  be  some  modifieati< 
and  my  idea  upon  the  subject  of  taxation  —  I  have  given  it  soi 
little  thought  —  is  that  it  should  be  on  the  earning  capacity  of 
company;  I  believe  in  the  taxation  of  personal  property. 

By  Mr.  Ainsworth. 

Q.  You  believe  that  there  should  be  a  system  of  taxati< 
graduated  accordingly  to  the  rate  of  dividend  which  you  ai 
able  to  pay?  A.  In  that  respect  taking  a  corporation,  if 
are  in  position  to  earn  a  certain  amount  of  money,  they  mai 
perhaps  pay  enormous  salaries  and  thus  reduce  the  amount  ol 
dividends  declared. 

By  Mr.  Guenther. 

Q.  In  view  of  taxing  the  earning,  don't  you  think  the  resi 
would  be  the  same  as  it  is  to-day  in  taxing  personal  property, 
that   those   companies   or   concerns   would  have   to   hire   exj 
bookkeepers,  etc.?    A.  Of  course,  that  is  a  subject  that  WOT 
have  to  be  considered;  but  my  idea  is  that  the  tax  should 
and  that  it  would  be  far  preferable  to  make  it  a  nominal  tax  01 
the  gross  earnings;  if  you  propose  a  tax  upon  the  net  earning 
of  a  company,  of  course  they  can  pay  their  officers  enormoi 
salaries,  and  thus  reduce  the  dividends. 


561 

By  the  Chairman. 

Q,  Suppose  the  State  should  determine  to  tax  tlie  gross  earn- 
ings of  the  company;  what  size  of  an  army  of  experts  do  you  sup- 
pose it  would  need  to  keep  them  in  hand?  A.  Of  course,  but  you 
take  our  case  in  the  same  condition  we  are  in  it  seems  to  me  a  little 
bit  unjust;  we  have  not  declared  a  dividend  or  received  any 
revenue  from  any  invention  whatever,  and  we  pay  the  State 
taxes  one  of  them  $876. 

By  Mr.  Guenther. 

Q.  How  long  have  you  been  incorporated?  A.  I  think  Feb- 
ruary, 1888. 

Q.  Did  a  number  of  people  engaged  in  the  same  line  of  busi- 
ness organize  together?  A.  No,  sir;  simply  to  develop  a  patent 
lasting  inaehine. 

Q.  Were  you  connected  with  the  company  when  they  were 
organized?  A.  Yes;  I  am  connected  with  the  company,  the 
Universal  Lasting  Machine  Company,  which  is  the  outcome  of 
another  company. 

Q.  You  saw  no  reason  why  you  should  not  incorporate  in  this 
State  under  existing  laws?  A.  No,  sir. 

By  Mr.  Malby. 

Q.  You  say  you  are  connected  with  other  corporations?  A. 
Yes;  with  the  John  Paten  Manufacturing  Company;  also  with 
the  Positive  Screw  Pump  and  Meter  Company,  but  that  is  a 
company  wrhich  never  been  in  business,  and  never  paid  any  tax. 

Q.  Do  you  believe  in.  taxing  personal  property?    A.  Yes,  sir. 

Q.  Is  there  any  good  reason  to  suggest  itself  to  your  mind  wrhy 
a  corporation  organized  without  the  State  should  pay  the  same 
|  tax  with  a  company  that  is  opganized  within  the  State?  A. 
No,  sir;  have  you  put  on  record  that  I  said  I  paid  from  $800 
State  tax;  that  is  for  the  John  Paten  Manufacturing  Company; 
although  both  of  them  are  domestic  corporations. 

Adjourned. 

7i 


562 

Joint  Committee  of  Taxation, 

New  York,  February  11,  1893. 
The  committee  met  pursuant  to  adjournment. 

Charles  Davison,  called  as  a  witness,  being  duly  sworn,  testifi* 
as  follows: 

By  Mr.  Hamilton. 

Q.  Where  do  you  live?    A.  In  New  York. 

Q.  You  are  the  secretary  of  the  National  Lead  Company?  A. 
Yes,  sir. 

Q.  Which  is  a  corporation  organized  under  the  laws  of  the 
State  of  New  Jersey?  A.  Yes,  sir. 

Q.  And  has  been  in  existence  as  such  since  December,  189] 
A.  Yes,  sir. 

Q.  That  company  was  constituted  of  various  previously  exis 
ing  corporations,  including  several  which  were  organized  und< 
the  laws  of  the  State  of  New  York?  A.  Yes,  sir. 

Q.  The  New  York  corporations  which  entered  into  this  coi 
binatiou   have   since   been   dissolved,   or   some   of   them?    A. 
think  so. 

Q.  What  is  the  business  of  the  National  Lead  Company? 
They  manufacture  white  lead,  oxides,  linseed  oil,  pipe  and  sheet 
lead,  and  in  fact  all  manufactures  of  lead. 

Q.  What  is  the  capital  stock  of  the  present  corporation?  A. 
Thirty  millions. 

Q.  Where  are  its  factories  carried  on  or  operated?  A.  In  a 
number  of  different  States. 

Q.  Some  of  them  in  the  State  of  New  York?    A.  Yes,  sir. 

Q.  How  many?    A.  I  think  there  are  six. 

Q.  Where  are  they  located  in  the  State  of  New  York?  A.  At 
Staten  island,  Brooklyn,  and  Ulster  county,  Saugerties,  or  what- 
ever the  name  of  it  is. 

Q.  Where  is  your  chief  office  for  the  transaction  of  the  busi- 
ness of  this  company?  A.  The  executive  offices  are  at  No.  1 
Broadway,  New  York,  and  the  chief  office  of  the  company  is  No.  1 
Exchange  place,  Jersey  City. 

Q.  By  that  you  mean  the  office  for  the  corporation  purposes 
is  in  Jersey  City?  A.  Yes,  sir. 


563 

Q.  But  the  business  uniformly  is  transacted  in  the  New  York 
office?  A.  Yes,  sir. 

Q.  Can  you  tell  us  what  is  the  output  of  this  company  annually, 
the  product,  the  annual  sales?  A.  No;  I  could  not. 

Q.  Can  you  give  us  an  estimate  or  approximation  of  what  it 
may  be?  A.  I  could  not  without  the  figures,  as  we  own  stocks 
of  other  companies,  and  I  could  not  separate  them  in  my  mind 
without  seeing  the  figures. 

Q.  What  real  estate  does  this  company  own  in  the  State  of 
New  York?  A.  It  owns  real  estate  in  Brooklyn,  Saugerties, 
Staten  island  and  Buffalo. 

Q.  What  taxes  does  this  company  pay  other  than  the  taxes  upon 
the  real  estate  which  it  owns  in  the  State  of  New  York?  A.  I  do 
not  think  I  could  tell  that  without  referring  to  the  records;  I 
think  the  State  taxes  the  company;  I  do  not  know  the  amount  or 
on  exactly  what. 

Q.  Your  company  has  applied  for  a  certificate  for  leave  to  do 
business  in  this  State?  A.  Yes;  and  received  one. 

Q.  And  you  clam  it  pays  its  tax  upon  what  they  allege  is  the 
capital  employed  in  the  State?  A.  I  presume  that  is  it. 

Q.  Do  you  remember  what  that  amount  is  fixed  at?  A.  I  do 
not ;  we  made  a  long  statement  to  the  Comptroller  of  this  State. 

Q.  Has  that  been  adjusted  yet?    A.  I  do  not  think  it  has. 

Q.  Do  you  remember  what  figures  were  claimed  by  your  com- 
pany as  the  basis  of  the  capital  employed  in  this  State  by  it?  A. 
No,  sir;  I  could  not  tell. 

Q.  Do  you  know  what  causes,  if  any,  led  to  the  organization 
of  this  company  under  the  laws  of  New  Jersey  when  its  business 
is  uniformly  transacted  in  the  State  of  New  York?  A.  Its  busi- 
ness is  not  uniformly  transacted  in  the  State  of  New  York;  its 
executive  offices  are  here  in  New  York. 

Q.  Its  principal  offices  are  manned  here  and  its  principal  busi- 
ness is  conducted  from  here,  isn't  it?  A.  No;  not  as  far  us 
sales  and  manufacturing;  what  do  you  mean,  the  business 

Q.  The  management  and  control  is  exercised  here;  the  super- 
vision? A.  Yes;  the  supervision. 


564: 

Q.  The  home  really  of  its  capital  is  in  the  State  of  New  York 
apart  from  its  real  estate  possessions;  now,  what  causes,  if  ai 
led  to  the  organization  of  that  company  under  the  laws  of  N< 
Jersey  and  not  under  the  laws  of  New  York?    A.  I  was  n< 
instrumental  in  forming  the  company;  I  was  elected  secretai 
after  the  formation  of  the  company;  but  I  presume,  if  I  can  gr 
a  presumption,  that  the  reason  of  its  being  practicable  to  obtai 
a  more  liberal  charter  to  preserve  the  autonomy  of  the  business 
better  in  New  Jersey  and  also  from  the  expense  being  less,  the 
taxation  being  less  there. 

Q.  Under  the  laws  of  New  Jersey  your  company  found  it 
sible  to  organize  what  would  be  a  trust,  a  combination  of  varioi 
corporations?     A.  A    company    that    could   own    a    number 
works  in  different  States  and  also  the  stocks  of  different  coi 
panies. 

Q.  Your  combination  is  generally  known  as  the  lead  tmt 
isn't  it?  A.  It  was  formerly  a  trust;  it  is  now  known  as 
company. 

Q.  And  you  found  that  under  the  laws  of  New  Jersey  you  coi 
organize  and  as  you  say  preserve  the  autonomy  of  the  trus 
whereas  under  the  laws  of  the  State  of  New  York  you  were  not 
permitted  to  do  that;  is  that  the  fact?  A.  I  do  not  know;  as  I 
say,  I  was  not  instrumental  in  organizing  the  company;  I  came  in 
afterwards,  but  I  presume  that  is  it. 

Q.  That  is  your  understanding  of  the  affair?     A.   Yes,  sir. 

By  Mr.  Malby. 

Q.  I  understand  yon  to  say  that  this  company  was  formed  l»y 
the  consolidation  of  various  other  lead  companies;  will  you 
please  tell  us  which  ones  they  were,  and  give  the  locations  of 
them?  A.  The  Atlantic,  with  works  located  in  Brooklyn;  the 
Brooklyn,  located  in  Brooklyn;  the  Bradle}',  located  in  Brooklyn; 
the  Jewett,  located  on  Staten  island;  the  Cornell,  located  at 
Buffalo;  the  Ulster,  located  at  Sangerties. 

Q.  Any  others?     A.  I  think  that  is  all. 

Q.  Were  all  these  companies  yon  have  mentioned  organized 
before  that  time  within  the  State  of  New  York?  A.  Yes,  sir. 


565 


Q.  All  State  organizations;  that  is.  incorporated  under  the 
laws  of  the  State  of  New  York?  A.  I  think  all  those  I  men- 
tioned? except  the  Atlantic  and  tin-  Cornell  bad  become  organized 
under  one  company  here  called  the  National  Lead  and  Oil 
Company. 

Q.  A  State  institution?     A.  A  State  institution. 

Q.  Now,   \vliat  companies  did  yon  take  in  in  this  consolidation 

outside  the  State  of  New  York?    A.  The  Southern,  Collyer  and 

Bed  Seal,  St.  Louis;  the  Shipman  and  Southern  of  Chicago;  the 

Kentucky  of  Louisville;  the  Eckstein  and  Anchor  of  Cincinnati; 

I  think  that  is  all. 

Q.  Now,  ifn  what  manner  did  you  secure  control  of  these 
various  companies?  A.  They  were  secured  by  purchase. 

Q.  The  purchase  of   their  stock?     A.  Yes,   sir. 

Q.  Did  you  reissue  new  stock  from  the  consolidated  company 
in  place  of  the  old?  A.  Yes,  sir. 

Q.  If  1  understand  you,  there  was  no  real  money  purchase  of 
any  of  these  previously  incorporated  institutions;  the  manner 
in  which  3011  secured  control  under  the  new  consolidated  com- 
pany was  by  the  issue  of  the  stock  of  the  new  company?  A.  I 
think  so. 

Q.  What  proportion  of  the  business  does  your  company  at  the 
present  time  do  in  the  rnited  States?  A.  I  could  hardly  answer 
that. 

By  the  Chairman. 

Q.  In  other  words,  how  many  lead  companies  do  you  know  of 
outside  of  your  present  organization  doing  a  similar  business? 
A.  There  are  a  great  many  different  branches. 

By   Mr.   Malby. 

Q.  Is  there  any  company  doing  business  outside  of  your  own 
with  anything  near  the  capital  you  have  invested?  A.  No;  I 
think  not.  '^ ' 

Q.  Give  us  your  best  estimate  of  the  proportion  of  the  whole 
business  which  your  consolidated  company  does  within  the 
I'nited  Stales?  A.  I  do  not  think  I  could  do  that,  because  it  may 


566 

do  a  larger  proportion  of  one  and  a  smaller  proportion  of  anoth< 
branch,  and  so  on. 

Q.  Can  yon  give  us  some  estimate  of  it?  A.  Nothing  thj 
would  be  reliable. 

Q.  Would  it  exceed  fifty  per  cent?     A.  I  should  not  think  so. 

Q.  How  about  your  linseed  oil;  what  proportion  of  that  bui 
ness  do  you  do  in  the  United  States?  A.  I  should  think  possibl 
seven  or  eight  per  cent. 

Q.  Can  you  tell  me  whether  the  price  of  the  products  in  whicl 
you  are  engaged  in  manufacturing  and  selling  have  inci 
any  since  the  various  companies  were  consolidated  into  one? 
Since  the  organization  of  this  company? 

Q.  Yes?    A.  No;  there  has  been  a  decrease. 

Q.  How  about  the  price  of  linseed  oil,  was  that  increased  c 
decreased?  A.  That  is  increased. 

Q.  How  is  it  with  white  lead?    A.  Decreased. 

Q.  I  understand  you  to  say  that  you  owned  the  stock  of  o1 
companies;  what  did  you  mean  to  be  understood  by  that? 
The  stock  of  other  companies  in  States  where  foreign  corpoi 
tiona  ran  not  own  property. 

Q.  There  are  some  States  in  the  Union,  then,  in  which  yoi 
company,  by  virtue  of  the  fact  that  it  is  organized  under  the 
of  the  Stare  of  New  Jersey,  can  not  do  business  there?     A.  It 
can  not  own.  real  estate,  I  believe. 

Q.  In  addition  to  having  consolidated  these  various  com- 
panies to  which  you  have  called  our  attention,  do  you  also  own 
in  those  States  stock  of  other  companies  doing  general  business 
of  the  same  order?  A.  Yes,  sir. 

Q.  Is  it  true  that  your  consolidated  company  either  owns  or 
controls  the  majority  of  the  companies  doing  this  kind  of  business 
in  the  United  States?  A.  Which  kind  of  business? 

Q.  The  business  in  which  you  are  engaged?  A.  We  are  engaged 
in  different  businesses. 

Q.  I  mean  by  that  the  different  branches  of  business  in  which 
you  are  engaged;  take  them  separately;  do  you  do  a  majority  of 
the  business  and  own  or  control  a  majority  of  the  companies  which 


567 


are  engaged  in  the  manufacture  and  sale  of  white  lead?     A.  Yes; 

0 

I  think  white  lead  we  do. 

Q.  And  the  linseed  oil?    A.  No;  that  is  very  small. 

Q.  What  is  your  other  chief  manufacturing  industry  besides 
white  lead?  A.  The  oxides. 

Q.  How  is  it  with  the  oxides;  do  you  manufacture  and  sell  and 
control  a  majority  of  that  article?  A.  I  am  not  clear  on  that; 
I  do  not  know  the  statistics  of  the  business  well  enough. 

Q.  Do  you   manufacture   and  sell  mixed   paints?    A.  No. 

Q.  What  other  article  do  you  engage  in  manufacturing  and 
selling  chiefly?  A.  We  manufacture  considerable  lead  pipe  and 
lead  sheet. 

Q.  What  proportion  of  the  total  output  in  the  United  States 
do  you  manufacture?  A.  I  could  not  say;  it  is  comparatively  a 
small  proportion  I  should  think. 

Q.  Has  the  capital  stock  been  increased  lately?  A.  No;  it  has 
not  been  increased  at  all. 

Q.  Do  you  knoAv  what  the  stock  is  worth?  A.  I  think  the  paper 
could  tell  you  better  than  I  could. 

The  Chairman. —  The  common  stock  closed  at  forty-eight;  the 
preferred  is  ninety-three  and  one-fourth. 

Q.  That  is  about  as  you  understand  it?    A.  Yes,  sir. 

Q.  Have  you  paid  any  dividends  since  the  organization  of  the 
company?  A.  Yes,  sir;  Ave  paid  four  quarterly  dividends  of  one 
and  three-quarters  per  cent  on  the  preferred. 

By  the  Chairman. 

Q.  1  do  not  know  whether  the  question  has  been  already  asked, 
but  if  it  was  I  did  not  hear  it;  can  you  tell  the  committee  what 
proportion  of  your  business  is  done  through  your  New  York  office, 
or  about?  A.  We  do  no  business  at  all  through  our  New  York 
offices. 

Q.  No  orders  are  jrtaced  there?  A.  No;  simply  the  executive 
business  of  the  concern. 

Q.  The  principal  office  is  located  where?     A.  The  selling  office? 

Q.  The  principal  office  of  the  company;  what  do  you  call   the 


568 

principal  office?     A.  The  executive  offices  are  here  in  New  Yorl 
at  No.  1  Broadway. 

Q.  That  is  the  principal  office  as  you  understand  it?    A.  I  thii 
likely  the  principal  office  is  in  New  Jersey. 

Q.  What  business  is  transacted  through  the  office  in  New  Jersey' 
A.  The  transfer  of  stock  and  its  corporate  business. 

Q.  And  where  are  the  offices  located  through  which  the  genera 
business  of  the  company  is  done?       A.  It  is  done  through  tl 
various  branches,  the  selling  and  all  that  sort  of  thing. 

Q  The  original  factories  that  were  taken  in  on  the  oonsolich 
tion  have  lost  their  identity  but  don't  they  continue  just  the  same' 
A.  Yes,  sir. 

Q.  You  say  your  company  has  an  interest  in  several  corporatioi 
in  other  States  that  were  not  taken  in  at  the  time  of  consolidation' 
A.  Yes,  sir. 

Q.  The  reason  they  were  not  taken  in  was  that  the  laws  of  tl 
States  in  which  they  were  located  respectively  did  not  admit 
foreign  corporation  to  own  property  there?  A.  Yes;  I  think 
was  the  principal  reason. 

Q.  Can  you  say  whether  your  company  has  a  controlling  intero 
in  these  various  corporations  in  other  States?     A.  Yes;  we  hav< 
a  controlling  interest. 

Q.  So  -that,  they  are  practically  a  part  of  the  National  company' 
A.  Yes. 

Q.  Taking  the  National  company  and  these  various  compani 
which  you  control  outside  of  your  own  company,  what  proporti* 
of  the  business  of  the  company    is    controlled    by    them    takci 
altogether?     A.  As  I  say  we  have  a  variety  of  branches,  in  some  o 
which  we  do  a  largo  proportion  of  the  business,  and  in  others  w< 
do  a  comparatively  small  proportion. 

Q.  "What    proportion  of  the  manufacture  of  Avhite  lead  is  coi 
trolled  by  the  combination?     A.   I   never  have  -seen  the  books  oi 
the  other  outside  companies  so  I  could  not  tell  you  that. 

Q.    Have,  you  any  idea  about   what   it    would  be?     A.  No;     it 
a  large  proportion,  but  1  do  not   know  as  to  the  exact   peiveutaj 
of  it. 


569 

Q.  Isn't  it  suluVieiitly  large  to  enable  you  to  control  the  market 
as  to  ^hite  lead?.  A.  No. 

Q.  TTo\v  would  that  apply  as  to  lead  pipe?  A.  It  would  not 
apply  at  all. 

Q.  How  would  it  apply  as  to  linseed  oil?  A.  That  is  a  very 
small  factor;  you  can  manufacture,  but  unless  you  have  some 
patent  it  will  not  control  any  market ;  if  you  should  attempt  to 
control  the  market  by  putting1  up  the  prices  you  would  simply 
increase  competition  which  would  in  the  end  be  disastrous;  that 
is  not  our  policy  at  all;  our  idea  is  and  it  ha®  been  to  lessen  our 
cost  and  sell  as  cheaply  as  possible  and  prevent  competition  in 
that  Avay. 

Q.  What  State  of  the  Union  does  your  corporation  do  the 
greatest  amount  of  business,  as  you  understand  it?  A.  Sell  the 
most  goods  in? 

Q.  Yes.  A.  I  should  presume  in  New  York  State,  though  I 
am  not  positive  as  to  the  exact  figures. 

Q.  I  think  T  understood  you  to  say  that  the  orders  for  the 
H  various  commodities  are  placed  at  the  different  factories,  is  that 

?     A.  Yes;  the  offices  of  the  different  factories. 

Q.  Now,  these  various  factories  or  offices  of  the  factories 
y  account  to  some  fountain  head,  don't  they?  A.  Yes,  sir. 

Q.  Where  is  that  fountain  head?  A.  The  executive  offices 
No.  1  Broadway. 

Q.  In  the  city  of  New  York?     A.  Yes,  sir. 

Q.  Then  boiling  it  down,  as*  a  matter  of  fact,  all  the  business 
of  the  company  is  transacted  in  the  city  of  New  York?  A. 
No;  not  all. 

Q.  These  various  outside  branches  are  simply  a  part  of  the  cen- 

1  office  in  the  city  of  New  York,  jsn't  that  so;  they  all  account 
to  it?  A.  Yes,  sir:  they  all  Account  to  the  New  York  office,  the 
same  as  a  railroad  going  through  a  number  of  States  has  one 
;head  office  that  they  have  to  account  to. 

Q.  No  other  business  is  done,  I  think  I  understood  you  to  say, 
in  the  New  .Jersey  office  except  to  keep  a  record  of  tl;e  stock  and 
transfers  of  the  stock?  A.  Yes,  sir. 


570 

Q.  And  that  all  the  receipts  are  received  in  the  New  Yor] 
office  and  are  accounted  for  to  the  NCAV  York  office  and  <1« 
burseinents  are  made  through  that?  A.  Through  the  New  Yor) 
office. 

By  Mr.  Guenther. 

Q.  Have  you  in  mind  any  alteration  of  the  corporation  laws 
this  State  that  would  be  an  inducement  for  corporations  such 
as  your  to  incorporate  in  this  State  and  still  provide  a  means 
of  tax  for  the  purpose  of  meeting  the  expenses  of  this  State? 
A.  I  never  studied  that  question  particularly,  but  I  should  say- 
that  if  the  thing  was  simplified  so  that  corporations  would  know 
exactly  what  they  would  have  to  pay  it  would  be  a  great 
in  advance. 

Q.  You  believe  in  some  specific  tax?  A.  So  that  they  woul 
know  exactly,  so  that  it  would  be  specific;  I  think  we  are  vei 
indefinite  as  to  what  may  be  collected  or  may  not  be  collected. 

Q.  You  have  no  proposed  amendment  in  mind  as  to  the  mannt 
of  simplifying  the  laws?  A.  No,  sir;  I  have  not  given  it  enouj 
attention. 

Q.  You   stated  that  you  did  not  know  the  particular  re* 
they  went  to  the  State  of  New  Jersey  to  incorporate?    A.  Sii 
ply  that  I  did  not  know  positively  as  I  came  in  afterwards; 
expenses,  as  I  understood  it,  were  light  there  —  the  expenses 
incorporation  —  and  the  charter  was  more  liberal. 

By  Mr.  Malby. 

Q.  I  think  it  already  appears  that  on  the  capital  stock  of  the 
companies  organized  in  the  State  of  New  Jersey  they  pay  no 
tax  to  the  State  there;  how  is  that?  A.  We  pay  a  tax  on  the 
organization;  I  think  there  is  a  slight  tax  each  year. 

By  the  Chairman. 

Q.  You  understand  that  under  the  laws  of  the  State  of  N<  w 
Jersey  corporations  are  not  required  to  make  the  same  kind  of 
reports  to  the  State  that  they  are  in  the  State  of  New  York,  isn'ij 
that  so?  A.  Yes;  not  such  detailed  reports. 

Q.  As  you  understand  it  not  so  inquistorial?    A.  Yes,  sir. 


571 

Q.  Is  that  one  of  the  objectionable  features  under  our  laws? 
A.  Yes,  sir;  I  think  it  is  a  very  objectionable  feature. 

Q.  Why?  A.  Because  it  throws  open  your  business  to  your 
competitors. 

Hy  Mr.  Guenther. 

Q.  Don't  that  apply  to  all  corporations  then?  A.  In  the  manu- 
facturing business  that  that  would  be  entirely  different,  fire 
insurance,  life  insurance  or  a  bank  or» anything  of  that  kind. 

Q.  Controlling  the  market  as  you  do  in  the  National  Lead  Com- 
pany would  it  make  any  difference  if  they  knew  your  business  or 
not?  A.  I  have  already  said  we  do  not  control  the  market;  the 
great  American  people  control  the  market. 

G.  Weaver  Loper,  called  as  a  witness,  being  duly  sworn,  testi- 
fied as  follows : 

By  Mr.  Hamilton. 

Q..  Where  do  you  live?    A.  I  live  in  New  York  at  present. 

Q.  You  are  connected  with  the  National  Cordage  Company? 
A.  Yes,  sir. 

Q.  In  what  capacity?    A.  Treasurer. 

Q.  You  have  also  been  connected  in  what  other  capacity?  A. 
Secretary  and  director. 

Q.  As  such,  are  you  familiar  with  what  the  total  output  of 
your  company  is?  A.  Yes,  sir. 

Q.  And  the  proportion  which  the  output  of  the  New  York  State 
companies  bear  to  the  total?  A.  Yes,  sir. 

Q.  What  is  the  total  output?  A.  Under  full  running  capacity 
about  85,000  tons  out  of  the  State  and  20,000  to  25,000  tons 
in  the  State. 

Q.  Is  this  20,000  to  25,000  tons  in  New  York  State  all  sold  and 
distributed  from  the  New  York  office  or  through  it?  A.  No,  sir. 

Q.  What  portion  of  it  ifij?  A.  That  would  be  a  very  difficult 
question  to  answer;  I  would  have  to  explain  still  further  that  in 
the  absorption  of  the  New  York  mills  each  concern  still  held  their 
individuality  and  sell  considerable  quantities  in  their  own  name, 
such  as  Waterbury  &  Co.,  William  Walls  Sons,  Tucker,  Carter 
&  Co.,  the  Elizabeth  Cordage  Company,  the  Lawson  Eope  Works. 


572 


Q.  They  sell  in  their  own  names?    A.  Yes,  sir. 
Q.   And   furnish  the  west  through  the  western   outlets? 
Yes,  sir. 

By  Mr.  Guenther. 

Q.  Can  you  tell  the  committee  what  is  the  amount  of  perso] 
tax  you  pay  in  the  State  of  New  York?    A.  I  have  not  the  slightesl 
idea, 

Q.  Have  you  ever  paid  aify?    A.  I  think  we  have. 

Q.  Where?    A.  In  the  State  of  New  Jersey. 

Q.  Don't  you  think  it  would  be  fair  since  your  output  is  aboul 
one  to  three  in  the  State  of  New  York  and  two-thirds  in  th< 
whole  Union  you  should  pay  some  personal  tax  in  the  State  oi 
New  York?    A.  I  do  not  think  the  National  Cordage  Compai 
would  object   to  doing  anything  that  was  fair  and  equitable 
connection  with  other  corporations;  they  would  like  to  work  und< 
the  State  of  New  York. 

Q.  Can  you  tell  us  what  amendment  you  have  in  mind  to 
general  corporation  laws  of  the  State  of  New  York  that  w< 
induce  you  to  come  back  in  the  State  and  still  contribute  a 
portion  of  your  tax  to  the  State?     A.  I  would  pull  down  ev< 
bar  I  could. 

Q.  What  are  they?    A.  I  would  not  compel  the  company 
make  out  elaborate  statements. 

Q.  We  amended  the  law  as  to  the  statement  last  year,  and  il 
is  niucli  more  liberal  than  it  was  before;  is  there  any  other  si 
gesiion  you  can  make  in  relation  to  the  amendments?    A.  Oi 
this,  that  the  concerns  that  I  have  mentioned  who  are  operai 
these  mills  pay  a  tax  to  the  State  of  New  York. 

Q.  They  do?     A.  Yes,  sir;  Waterbury,  Wall,  Tucker,  Carter 
Co.,    the    Elizabeth    Company    and    the    Lawrence    mills,    am 
we  own  the  properties. 

Q.  They  pay  on  real  estate?     A.  Yes.  sir. 

Q.  Do  they  pay  any  personal  tax?     A.  They  pay  a  tax  on  theij 
sale*,  each  of  these  concerns. 

Q.   Have  you  in  mind   the   amount  of   tax  they  pay?     A. 
have  not. 


573 

By  the  Chairman. 

Q.  On  the  consolidation,  did  not  these  several  domestic  cor- 
porations lose  their  identity,  or  did  they  still  continue  to  exist 
as  corporations?  A.  It  is  in  this  way;  we  absorbed  the  concerns 
I  have  mentioned;  purchased  the  plants  outright;  we  have  them 
leased  to  each  of  these  concerns  for  a  series  of  years,  the  mills; 
at,  the  beginning  of  each  year  they  are  compelled  to  put  in  a  com- 
petitive bid  to  manufacture  goods  for  the  National  Cordage 
Company;  they  have  their  capital  in  the  business  but  we  own  the 
plants;  the  National  have  their  working  capital  and  each  indi- 
vidual mill  has  theirs;  the  concern  that  wrill  not  meet  a  bid 
must  shut  down  and  does  not  run. 

Q.  If  they  do  not  meet  a  bid  do  they  derive  any  benefit  from 
the  combination?  A.  Not  a  cent. 

Q.  It  has  been  alleged  as  to  one  combination  that  whether  they 
operated  or  not  they  received  their  share  of  the  earnings  of 
the  combination  just  the  same,?  A.  The  National  Cordage  Com- 
pany act  in  that  matter  in  a  cold-blooded  way;  they  have  leased 
the  mills,  and  they  must  put  in  a  competitive  bid;  all  bids  are 
then  opened ;  we  find  then  that  we  have  a  certain  price  for  manu- 
f  act  L>  ring  sufficient  to  run  us  for  that  year;  another  concern  per- 
haps would  not  meet  that  bid,  and  we  shut  them  down. 

By  Mr.  Guenther. 

Q.  Are  not  those  that  lease  these  concerns  stockholders  in  the 
National  Cordage  Company?  A.  Stockholders  some  days,  E  sup- 
pose, and  not  stockholders  the  next;  I  think  all  of  them  are  to  a 
certain  extent  stockholders  of  record. 

By  Mr.  Ainsworth. 

Q.  When  you  organized  your  combination,  did  the  stockholders 
in  existing  corporations  become  stockholders  in  your  corporation? 
A.  Only  regarding  the  New  York  Concern — ;  all  that  we  have 
I  bought  out  — 

Q.  Did  you  issue  any  of  your  stock  to  them  as  a  corporation 
in  payment  of  their  plant?  A.  There  was  a  certain  amount  of 
stock  issued  to  the  New  York  concerns. 

Q.  Was  that  stock  issued  to  them  in  consideration  of  their 
plant?  A.  Part  in  stock  and  part  in  cash. 


By  the  Chairman. 

Q.  Was  it  in  consideration  of  their  plant?    A.  Yes,  sir. 

Q.  Did  they  then  cease  to  be  a  corporation;  in  other  words, 
what  became  of  the  stock  each  individual  held  in  these  corpora- 
tions; did  they  in  place  of  the  stock  they  held  in  these  organiza- 
tions take  your  stock?  A.  No,  sir. 

Q.  They  retained  their  holdings  in  the  old  corporations?  A. 
Yes,  sir;  and  do  to-day. 

Q.  And  to  them  was  divided  the  stock  which  that  organization 
received  from  yours;  to  the  stockholders  of  the  existing  plant 
was  devoted  thte  stock  which  that  corporation  took  in  yours' 
A.  That  I  don't  know. 

Q.  Or  did  the  corporation,  as  a  corporation,  hold  that  as  ai 
asset?  A.  I  don't  know. 

Q.  Have  you  any  way  of  finding  out?    A.  I  think  I  could. 

By  Mr.  Ainsworth.     * 

Q.  If  they  still  hold  stock  in  your  corporation  as  an  asset  ol 
that  corporation  then  it  is  personal  property  owned  by  thei 
isn't  it?    A.  I  don't  know. 

Q.  Wouldn't  it  be?    A.  I  should  say  it  is.     * 

Q.  Then  they  should  be  taxed  upon  that,  should  they  not,  upoi 
the  theory  of  taxing  personal  property?  A.  I  should  yes  to  thai 

Q.  But,  as  matter  of  fact,  you  do  not  know  whether  they  have 
paid  a  tax  on  it  or  not?  A.  No;  I  do  not. 

Q.  Your  combination  or  corporation  is  organized  upon  the  theoi 
of  controlling  the  product  of  all  these  factories  through  one  sal< 
agent,  isn't  it?  A.  Not  through  one;  we  have  a  series  of  sale 
agents. 

Q.  But  they  are  subordinate  to  the  corporation?  A.  Yes;  w< 
are  the  owners  of  the  plants;  but  we  are  not  the  owners  of  theii 
capital  stock. 

Q.  Are  you  able  to  tell  how  much  stock  you  issued  to  any 
these  corporations  then  existing?    A.  No,  sir. 

Q.  What  is  the  capitalization  of  your  company?  A.  Twenty- 
five  millions. 


By  the  Chairman. 

Q.  Do  you  know  the  amount  of  capital  stock  of  any  one  of  the 
corporations  that  was  taken  in?  A.  Yes;  I  know  my  own. 

Q.  Do  you  object  to  saying  how  much  that  was?  A.  With  the 
best  of  feeling,  I  would  object  to  stating  the  amount  at  which  it 
was  taken  in;  but  if  I  can  answer  your  question  in  this  way,  it  was 
very  little  above  the  valuation  of  the  real  estate  and  machinery. 

By  Mr.  Ainsworth. 

Q.  What  was  your  corporation?  A.  The  Victoria  Cordage 
Company. 

Q.  Take  the  Victoria  Cordage  Company;  what  was  done  with 
that  corporation,  with  the  stock  which  was  issued  to  you  by  the 
new  corporation?  A.  It  was  locked  up  in  a  box. 

Q.  Was  it  distributed  to  the  stockholders?    A.  No,  air. 

Q.  Then  your  corporation  still  owns  the  new  stock  as  an  asset? 
A.  Yes,  sir. 

Q.  Do  you  object  to  telling  us  how  much  it  was?    A.  Yes,  sir. 

Q.  Do  you  know  whether  your  corporation  ever  paid  a  tax 
upon  that  stock  or  not9  A.  Yes,  sir. 

Q.  Has  it?     A.  Yes,  sir. 

Q.  Where?     A.  Ohio. 

Q.  This  was  under  the  listing  law  that  you  were  caught?  A. 
Yes;  we  were  not  caught;  we  declared  it. 

By  the  Oh  airman. 

Q.  What  becomes  of  the  dividends  that  are  declared  011  the 
stock  that  you  received  from  the  National  company?  A.  They 
are  divided  among  the  stockholders. 

Q.  Ar«j  they  divided  among  the  stockholders  of  the  new  stock 
I  or  the  holders  of  the  old?    A.  To  what  do  you  refer? 

Q.  I  refer  to  the  stock?    A.  Take  the  Victoria  Cordage  Com- 
ly;    we  received  a  certain  amount  of    dividends    from    the 
National  Cordage  stock  that  we  hold;  that  is  declared  as  a  divi- 
dend to  the  holders  of  the  Victoria  Cordage  Company  stock. 

Q.  Then  does  that  carry  out  the  idea  I  suggested,  that  whether 
rou  run  or  whether  you  don't,  you  get  your .  dividends  just  the 


576 


same?     A.  No;  I  have  got  to  keep  that  plant  up;  I  have  got 
support  that,  plant;  if  yoa  do  not  run  — 

Q.  Well,  suppose  your  plant  does  not  run;  you  have  receive 
stock  at  least  equal  to  the  value  of  your  real  estate  and  your 
plant?    A.  Yes,  sir. 

Q.  And  on  that  stock  you  receive  a  dividend  from  the  National 
Cordage  Company;  do  you  say  that  the  dividend  thus  received 
is  divided  among  the  stockholders  of  the  original  concern?  A. 
That  is  right. 

Q.  Don't  they  receive  their  earnings  then  whether  they  operal 
or  not?  A.  No  more  than  if  you  went  into  the  market  ai 
bought  stock;  suppose  I  sell  that  stock? 

Q.  But.  I  have  understood  you  to  say  that  you  have  received 
amount  at  lease  equal  to  the  value  of  the  real  estate  and  planl 
A.  Yes,  sir. 

Q.  So  that  you  have  practically  sold  out?  A.  Yes,  sir:  I  ha1 
got  the  stock  and  sold  oat  the  mill. 

Q.  And  you  get  your  earnings  whether  you  operate  or  nc 
don't  you?  A.  That  is  right,  but  not  in  the  light  you  place  it 
suppose  I  sell  out;  I  have  a  plant  worth  $500,000,  and  I  ti 
|500,000  worth  of  stock  for  it;  you  must  remember  that  I  hai 
only  converted  one  asset  into  another;  if  I  sell  that  stock,  y( 
can  not  say  that  I  got  any  remuneration. 

By  Mr.  Malby. 

Q.  You  have  no  right  to  shut  down  if  you  take  that  sitocl 
because  you  are  released  by  your  ownership  in  the  corporation' 
A.  No,  sir;  not  at  all;  that  mill  is  leased;  you  are  compelled 
support  that  mill;  you  must  keep  it  up;  if  you  are  not  willing 
manufacture  at  the  bid  sent  to  the  company  you  shut  down, 
during  that  year  you  operate  you  control  the  mill  at  your  o^ 
expense. 

By  the  (  hairman. 

Q.  But  the  National  Cordage  Company  are  the  owners  in 
of  the  entire  plant?     A.  Absolutely. 

Q.  Therefore  no  loss  can  come  to  the  original  holders  becai 
they  have  received  some  new  stock  at  least  equal  to  the  value 


577 

of  what  they  held  in  the  old?     A.  Very  well;  suppose  they  sell 
it;  wrhere  does  the  corporation  stand? 

Q.  This  corporation  is  merged  into  the  new  one?  A.  Suppose 
they  divide  up  the  assets,  and  then  run  under  their  manufacturing 
contra cr? 

By  Mr.  Malby. 

Q.  We  understood  you  to  say  you  did  not  divide?  A.  I  said  I 
did  not. 

By  the  Chairman. 

Q.  I  understand  that  the  entire  amount  of  stock  your  company 
received  is  locked  up  in  a  box?  A.  That  is  right. 

Q.  And  has  not  been  distributed?  A.  No;  and  will  not  be 
until  it  gets  to  par. 

Q.  But  the  earnings  are  distributed?  A.  That  is  right,  and 
the  dividends  are  distributed;.!  see  the  point  you  are  arriving  at, 
buc  the  National  Cordage  Company  are  there  for  the  company 
alone,  and  not  lor  the  old  owners  of  the  mills;  that  is  why  I  hold 
my  stock. 

By  Mr.  Malby. 

Q.  You  simply  sell  the  products  of  these  various  manufacturing 

wporations  which  you  have  consolidated  into  yours?  A.  Yes, 
sir. 

Q.  Did  you  force  a  sale  of  these  various  corporations  to  the 
National  Cordage  Company  by  the  purchase  of  a  majority  of  the 
stock  and  by  an  election  of  the  directors?  A.  No,  sir. 

Q.  How  did  you  get  control  of  it?  A.  When  they  wanted  to 
|  sell  out  we  bought  them. 

By  the  Chairman. 

Q.  Barkis  was  willing  all  around?  **A.  That  is  right. 
By   Mr.    Malby. 

Q.  Was  that  willingness  brought  about  by  the  fact  that  your 
>mpany  had  purchased  a  majority  of  their  stock  and  held  a  eon- 
)lling  interest  in  it?    A.  No,  sir. 
73 


Q.  You  say  that  unless  they  accept  your  bids  they  do  not 
manufacture  for  you?  A.  That  is  right. 

Q.  Do  they  manufacture  for  anybody?  A.  No,  sir;  it  is  01 
property. 

Q.  You  simply  say  to  them  if  they  can  not  manufacture  for  you 
and  at  your  prices  they  must  shut  down?    A.  That  is  right; 
can  not  make  the  prices;  it  is  a  competitive  bid. 

Q.  You  owning  a  majority  of  the  stock  and  controlling 
directors  simply  shut  down?    A.  Not  a  majority  of  the  stock  but 
owning  the  mills. 

Q.   But  you  lease  them;   are  there   any  regulations  or  law; 
which  authorizes  you  to  shut  them  down?    A.  Certainly  there  is 
if  they  can  not  meet  the  competitive  bids. 

Q.  Is  that  a  part  of  the  laws?    A.  Yes,  sir. 

Q.  If  they  do  not  meet  competitive  bids  they  shall  not  manu- 
facture? A.  Yres,  sir. 

Q.  That  is  a  part  of  Hie  laws  aifd  not  part  of  the  power  y< 
exercise  by  virtue  of  owning  the  stock  or  controlling  the  din 
tors?  A.  No. 

Q.  It  does  not  depend  at  all  upon  the  fact  that  you  own  th 
stock?    A.  We  do  not  own  the  stock;  we  own  the  plants;  there 
no  concern  to-day  in  which  we  own  as  you  may  say  a  majoril 
of  the  stock;  we  never  operate  that  way. 

Q.  Doesn't  it  depend  upon  the  fact  that  the  directors  ai 
favorable  to  your  company?  A.  Which  directors? 

Q.  The  directors  of  the  old  companies,  as  I  understand  you  to 
say?  A.  No;  it  is  a  matter  of  indifference  to  us  whether  the 
directors  of  the  old  companies  are  favorable  or  not. 

By  the  Chairman. 

Q.  Don't  your  owning  it  or  controlling  it  interpolate  in  your 
contract  with  these  various  concerns —  A.  We  have  no  con- 
tracts except  a  manufacturing  contract. 

Q.  But  you  have  a  contract  which  provides  that  if  they  can 
not  manufacture  at  your  prices  they  shall  not  manufacture  at  all? 
A.  No,  sir;  we  have  a  contract  that  if  they  can  not  manufacture 
at  she  competitive  bid  price  we  accept  they  can  not  manufacture. 

Q/Isn't  that  the  same  thing?    A.  No,  sir. 


579 

By  Mr.  Ainsworth. 

Q.  These  competitive  bids  come  from  your  own  stockholders? 
A.  No,  sir;  from  the  different  mills. 

Q.  The  different  mills  are  your  stockholders,  aren't  they?  A. 
Some  of  them  are  and  some  are  not;  some  have  sold  the  stock. 

Q.  Your  competitive  bids  is  confined  to  your  own  stockholders 
practically,  isn't  it?  A.  No,  sir;  not  necessarily,  because  some 
rof  them  have  sold  the  stock  and  some  hold  the  stock. 

Q.  Do  you  mean  stockholders  of  the  Cordage  company?  A. 
Yes,  sir;  certainly. 

Q.  The  stockholders  of  the  Cordage  company  are  stockholders 
of  the  old  existing  corporations,  aren't  they?  A.  I  say  that 
iparties  to  whom  stock  was  given  at  the  tune  of  purchase,  some 

them  have  sold  their  stock  and  some  hold  it. 

Q.  You  kept  yours?    A.  Yes,  sir. 

Q.  And  you  know  of  some  of  the  existing  corporations  at  the 

to  of  your  corporation  that  have  sold  their  stock?    A.  Yes,  sir. 

Q.  And  do  those  corporations  who  have  sold  their  stock  still 
st  and  maintain  their  plants?  A.  Y^es,  sir. 

Q.  And  in  those  cases  the  stock  has  been  divided  among  the 
;kholders  of  the  old  company?  A.  Yes,  sir. 

By  Mr.  Guenther. 

Q.  The  fact  is  that  some  of  these  corporations  that  existed 
fore  the  consolidation  can  run  their  works  unless  the  National 
>rdage  Company  give  their  consent  to  them  to  run?    A.  No,  sir; 
can  run  if  we  accept  —  if  they  make  the  same  price  at 
Lch  we  accept  the  competitive  bids. 

\.  What  is  the  object  of  this  competitive  bid?    A.  The  reduc- 
of  the  cost  of  manufacturing. 

And  you  control  it  upon  the  market  afterwards,  the  National 
Company?    A.  Yes,  sir. 

By  the  Chairman. 

Q.  You  are  in  absolute  control  of  the  market?    A.  Not  always; 
e  would  like  to  get  it. 


580 

By  Mr.  Ahearu. 

Q.  Isn't  twenty-five  per  cent  of  your  goods  sold  by  Waterbi 
and  Wall  in  the  city  of  New  York?    A.  No,  sir;  Waterbury 
three  houses  over  the  country. 

By  Mr.   Guenther. 

Q.  If  you  were  to  get  entire  control  you  would  be  willing 
pay  a  fair  percentage  of  tax  to  the  State  upon  your  persoi 
property?    A.  We  would  be  willing  to  pay  it  now  just  as  mu< 
as  then. 

By  Mr.  Ahearn. 

Q.  You  don't  know  whether  Waterbury  and  Wall  pay  any 
A.  I  do  not. 

Q.  You  people  do  not  pay  any  personal  tax?  A.  E  do 
think  so. 

By  the  Chairman. 

Q.  Waterbury  &  Co.  and  Wall  are  only  agents?    A.  No, 
they  are  a  regularly  authorized  concern,  with  capital  I  sup] 
the  two  companies  together,  of  three  or  three  and  a  half  millioi 
operating  their  own  business. 

Q.  Waterbury  and  Wall  are  stockholders  in  your  company 
A.  Yes,  sir. 

Louis  D.  Clark,  called  as  a  witness,  being  duly  sworn,  testifl< 
as  follows 

By  Mr.  Hamilton. 

Q.  Where  do  you  live?    A.  In  East  Orange,  New  Jersey. 

Q.  You  are  connected  with  the  Standard  Oil  Company? 
Yes,  sir. 

Q.  In  what  capacity?  A.  I  am  secretary  of  the  Stan< 
Oil  Company  in  New  York. 

Q.  And  in  what  capacity  are  you  related  to  the  parent  plan! 
A.  There  is  no  parent  plant. 

Q.  To  the   central  organization  or  the   central   combinatioi 
A.  I  know  of  no  such  central  combination. 

Q.  Where  is  the  office?    A.  Twenty-six  Broadway. 


581 

Q.  What  other  business  is  transacted  at  that  office  besides  the 
!   business    of   the   New   York   Standard   Oil   Company?    A.   The 
National  Transit  Company  has  an  office  there. 

Q.  What  other  business  of  any  of  the  Standard  Oil  Companies 
I  or  constituents  of  the  old  Standard  Oil  Trust  are  transacted  there? 
n  A.  The  Standard  Oil  Trust  or  the  liquidating  trustees  have  a 
I  transfer  office  there,  I  believe. 

Q.  Are  you  in  their  employ  also?    A.  No,  sir. 
\  ,    Q.  Are  your  duties  solely  confined  to  the  duties  of  secretary 
of  the  New  York  company?    A.  I  am  also  secretary  of  some 
other  companies. 

Q.  Which  companies  were  formerly  members  of  the  Standard 
Oil  Trust?  A.  They  were  not  members  of  the  Standard  Oil  Trust; 
their  stock  was  owned  by  the  Standard  Oil  Company. 

Q.  But  they  were  connected  with  the  Standard  Oil  Trust9  A. 
Only  in  that  way. 

Q.  I  do  not  care  in  what  way;  but  they  were  connected  with 
it?    A.  As  companies  they  had  no  connection  with  it;  no  sir. 
Q.  They  are  members  of  it?    A.  No,  sir. 
Q.  They   sold   their  product   to   it?     A.  No,   sir. 
Q.  In  what  way  were  they  connected  with  it?     A.  I  say  they 
were  not  connected  with  the  Standard  Oil  Trust. 

Q.  In  what  way  did  they  deal  with  the  Standard  Oil  Trust? 
They  had  no  dealings  with  them  as  corporations. 
Q.  When    was    the    Standard    Oil    Trust    dissolved?     A.  Last 
rch. 

Q.  What  was  it  composed  of?    A.  It  was  composed  of  a  board 
nine  trustees. 

Q.  What  did  these  trustees  own  or  hold?    A.  They  held  ihe 
ks  of  various  corporations. 

Which  of  the  corporations  are  now  transacting  businebs 
ch  your  board  of  trustees  represented?    A.  The  Standard  Oil 
pany  in  New  York. 
Q.  Which  others?    A.  There  are  no  others  transacting  business 


582 


I 

: 


Q.  What  is  the  stock  of  the  Standard  Oil  Company  of  New  Yoi 
A.  Seven  millions. 

Q.  That  is  organized  under  the  laws  of  the  State  of  New  Y( 
Isn't  it?    A.  Yes,  sir. 

Q.  With  its  real  estate  situated  where?    A.  Some  in  New  Yoi 
city,  some  Long  Island  City,  Brooklyn,  Buffalo,  Olean,  Osw< 
various  points  throughout  the  State  and  in  New  England. 

Q.  Your  companies  pay  its  corporate  tax  under  the  act  of 
1880-1?  A.  No,  sir;  as  a  manufacturing  company  it  pays  no 
corporate  tax. 

Q.  What  is  its  annual  output?    A.  I  could  not  say. 

Q.  Can  you  give  it  to  us  for  any  year  of  the  past  ten?  A. 
I  could  not. 

Q.  What  amount  of  tax  is  paid  "by  this  company  on  personal 
property  in  the  State  of  New  York?  A.  That  I  could  not  answer 
intelligently  for  the  reason  that  the  company  has  increased  within 
the  last  year,  and  it  has  not  as  yet  paid  the  tax;  since  the  dissolu- 
tion of  the  trust  there  has  been  a  consolidation  of  a  number  of 
companies. 

Q.  When  was  this  consolidation  entered  into?    A.  Last  April. 

Q.  How  many  companies  were  embraced  in  that  consolidation? 
A.  Half  a  dozen. 

Q.  Were  they  all  New  York  corporations  prior  to  the  time 
they  were  merged  into  one?  A.  All  but  two  of  them  were;  there 
were  two  from  New  England. 

By  Mr.  Guenther. 

Q.  At  the  time  of  your  consolidation  in  the  State  of  New  York, 
was  stock  issued  to  those  connected  with  the  Standard  Oil 
Company;?  A.  I  do  not  quite  understand  you. 

Q.  All  the  stock  at  the  time  of  your  consolidation  was  held  by 
whom;  by  New  Yorkers?    A.  The  stock  of  the  Standard  Oil 
pany  in  New  York? 

Q.  Yes;   at  the  time  you  incorporated  or  consolidated 
7,000,000  capital?    A.  Previous  to  that  time,  do  you  mean? 


583 

Q.  At  that  time?  A.  It  was  held  partly  by  the  trustees  of  the 
Standard  Oil  Company  and  partly  by  individuals. 

Q.  At  the  time  of  your  consolidation  and  incorporation  in  this 
State  did  you  pay  an  incorporation  tax  on  the  7,000,000?  A.  Yes; 
we  had  paid  on  5,000,000,  the  original  capital  of  the  company 
when  it  was  organized  in  1893,  and  we  paid  on  the  increased 
2,000,000  at  the  time  of  the  consolidation. 

Q.  I  understood  you  to  testify  that  you  were  incorporated  in 
this  State?  A.  Yes,  sir. 

By  Mr.  Ainsworth. 

Q.  You  say  ytour  consolidation  took  effect  last  April?  A. 
Yes,  sir. 

Q.  Do  you  know  what  assessment  was  made  in  July  upon  the 
personal  property  of  the  Standard  Oil  Company  in  New  York?  A. 
The  assessment  on  the  Standard  Oil  Company  at  that  time  was 
made  on  the  old  company  prior  to  the  consolidation,  which  was 
on  |600,000. 

Q.  That  would  include  the  personal  property  you  had  at  Olean, 
Buffalo,  Oswego,  etc.?  A.  No,  sir;  it  would  not. 

Q.  Were  they  not  different  properties  of  the  old  company?  A. 
No.  sir;  they  were,  but  they  did  not  come  into  the  tax  year;  the 
assessment  made  in  July  was  on  the  personal  property  as  it 
existed  on  the  second  Monday  of  January  which  was  prior  to  the 
consolidation. 

Q.  And  prior  to  the  consolidation,  the  Oswego  works  up  there 
were  a  part  of  your  —  A.  They  were  a  separate  organization,  the 
Oswego  Manufacturing  Company. 

Q.  And  that  organization  was  merged  into  this  and  it  ceased 
to  exist  as  a  separate  corporation?  A.  Yes,  sir. 

Q.  And  the  Oswego  Manufacturing  Company  became  stock- 
holders in  the  Standard  Oil  Company  at  that  time?  A.  They 
did. for  the  time  being. 

Q.  And  now,?  A.  No,  sir;  the  stock  was  distributed  among  the 
stockholders;  the  stock  they  received  from  the  Standard  Oil 
Company  in  New  York. 


584 

Q.  The  amount  of  stock  issued  to  that  corporation  represented 
your  estimate  of  its  value?  A.  Yes,  sir. 

Q.  Its  personal  property  will  hereafter  be  assessed  here  being 
located  here?  A.  Yes,  sir;  it  is  a  part  of  the  personal  property 
and  will  come  in  New  York. 

By  Mr.  Guenther. 

Q.  You  have  no  connection  with  any  other  company  outside 
of  the  State?  A.  Do  you  mean  the  Standard  Oil  Company  in 
New  York  or  myself? 

Q.  1  mean  the  Standard  Oil  Company  in  New  York?  A. 
No,  sir. 

l>y  Mr.  Ainsworth. 

Q.  You  saw  fit  to  organize  under  the  laws  of  the  State  of  New 
York;  did  you  take  in  consideration  the  advantages  to  be 
derived  from  organizing  outside  of  the  State?  A.  I  presume  that 
was  considered  at  the  time;  I  had  nothing  to  do  with  it. 

Q.  Do  you  consider  the  tax  which  the  State  of  New  York  now 
imposes   upon   corporations  organized   within  the   State  burden- 
some?    A.  That  is  a  matter  which  I  do  not  feel  competent  to 
express   an   opinion;   it  does  not  bear  on   us   as   a  corporatioi 
because  as  a  manufacturing  corporation  we  are  exempt. 

Q.  But  the  organization  tax  you  find  no  fault  with?     A.  It 
larger  than  we  have  to  pay  in  other  States. 

{>y  Mr.  (luenther. 

Q.  Don't  you  think  a  manufacturing  corporation  ought  to  pay 
a  tax  as  well  as  any  other  corporation?  A.  No,  sir;  I  do  no1 
think  it  should. 

Q.  You  have  protection  to  your  property  by  the  State?  A. 
We  pay  a  local  tax. 

Q.  Don't  other  corporations  do  the  same?  A.  Yes,  sir;  bui 
we  manufacturing  corporations  disburse  more  money  in  the  State 
and  bring  more  wealth  in  to  tin1  State  than  a  business  corpora- 
tion does. 


1 


585 


Bv  Mr.  Ainsworth. 


Q.  You  make  a  distinction  between  a  corporation  which 
obtains  a  valuable  franchise  and  a  manufacturing  corporation? 
A.  Yes,  sir. 

Q.  Take  your  corporation;  when  your  tax  will  be  adjusted  next 
year  upon  the  amount  of  personal  property,  it  is  upon  the  basis  of 
the  property  you  held  in  January;  how  is  that  arrived  at  by  the 
authorities;  do  you  make  a  statement?  A.  We  make  a  state- 
ment to  them  of  the  amount  of  our  assets  and  liabilities  and  the 
--ed  valuation  of  our  real  estate. 

Q.  That  don't  apply  to  the  assessed  valuation  of  real  estate  in 
other  places;  that  would  be  subject  to  local  tax  there;  but  you 
|  furnish  them  with  a  statement  of  your  assets  and  liabilities  as  a 
corporation?  A.  Yes,  sir. 

Q.  And  is  that  verified  by  you?    A.  Yes,  sir. 

Q.  And  that  is  the  basis  of  taxation?     A.  Yes,  sir. 

By  Mr.  Hamilton. 

Q.   Deducting   from   that   the   assessed   valuation   of   the   real 
n  estate;  in  order  to  arrive  at  the  value  of  the  personal  property 
I  they  deduct  from  the  entire  assets  the  assessed  valuation  of  the 
I  real  estate?    A.  Yes,  sir. 

By  Mr.  Guenther. 

Q.  Will  you  state  to  the  committee  in  what  manner  a  nianu- 

icturing  corporation  is  of  more  benefit  to  the  State  than  a 
less  corporation,  and  why  they  should  be  exempt  from  taxa- 
and  others  not,  receiving  the  same  protection  the  other  cor- 

>rations  receive,  they  contributing  to  the  expense  of  the  State 

id  you  do  not?    A.  Because  we  employ  a  great  deal  of  labor; 

id  we  also  pay  a  larger  real  estate  tax  than  a  business  corpo- 

ition. 

Q.  Can  you  give  us  any  other  reason?     A.  No;  I  think  not. 

By  Mr.  Ainsworth. 

Q.  You  make  this  distinction  that  any  person  can  engage  in  a 
mfacturing  business  without  the  aid  of  the  State  while  he 


586 

can  not  run  a  railroad  without  invoking  the  right  of  eminei 
domain?    A.  Yes,  sir. 

William   H.    Butler,   called   as   a   witness,   being   duly   swoi 
testified  as  follows: 

By  Mr.  Hamilton. 

Q.  Where  do  you  live?    A.  In  New  York. 

Q.  And  you  are  connected  with  the  American  Tobacco  Com- 
pany? A.  Yes,  sir. 

Q.  In  what  capacity?    A.  Secretary. 

Q.  WTien  was  the  American  Tobacco  Company  organized? 
In  January,  1890. 

Q.  And  under  the  laws  of  the  State  of  New  Jersey?    A.  Yes, 

Q.  Its  capital  stock  is?    A.  Thirty-five  millions. 

Q.  It  has  an  office  in  the  city  of  New  York?    A.  Yes.  sir. 

Q.  Its  principal  business  office?     A.  No,  sir;  its  principal 
ness  office  is  in  Newark,  N.  J. 

Q.  Where    is    the    New    York    office    located?     A.  Forty -1 
Broadway. 

Q.  What  business  is  earned  on  at  45  Broadway?    A.  Ex( 
tive  business. 

Q.  What  business  is  carried  on  at  the  New  Jersey  office? 
Corj»oration  business. 

Q.  The  transfer  of  stock  and  the  like  is  carried  on  in  N 
Jersey,  bur  the  actual  management  and  control  of  the  business  ^ 
is  exercised  in  the  New  York  office,  the  executive  part  of  it?     A. 
Yes,  sir. 

Q.  Are  its  officers  chiefly  residents  of  the  State  of  New  York? 
A.  No;  some  are  residents  of  the  State  of  New  Jersey,  some  in 
New  York  and  some  in  Virginia. 

Q.  What  causes  led  to  the  organization  of  this  corporation 
under  the  laws  of  the  State  of  New  Jersey,  if  you  know?  A. 
When  we  were  organized  in  1890,  we  were  informed  that  the 
laws  of  New  York  were  in  somewhat  of  a  chaotic  stale,  and  we 
were  advised  by  counsel  to  organize  under  the  laws  of  New  I 
Jersey. 


587 


Q.  What  do  you  say  as  to  the  laws  at  present  existing  in  the 
State  of  New  York?  A.  I  think  they  are  very  much  improved; 
in  fact,  if  we  were  to  organize  to-day  we  would  organize  under 
the  laws  of  the  State  of  New  York. 


By  Mr.  Guenther. 

Q.  Where  have  you  got  your  office  in  New  Jersey?  A.  Eight 
hundred  and  two  Broad  street,  Newark,  N.  J. 

Q.  The  only  object  of  having  that  office  is  for  the  reason  that 
the  law  under  which  you  are  incorporated  stipulates  that  you 
shall  have  an  office  in  New  Jersey  at  which  your  directors  meet 
annually?  A.  Yes,  sir. 

Q.  And  that  is  about  the  only  purpose  of  that  office?  A.  It  is 
for  general  corporation  purposes. 

Q.  Do  you  pay  any  tax  upon  personal  property  in  the  State  of 
New  York?  A.  Yes,  sir. 

Q.  How  much?  A.  That  I  could  not  say;  we  pay  it  in  New 
York  city  and  Kochester,  where  we  have  factories. 

By  Mr.  Malby. 

Q.  The  real  estate  tax  and  personal  tax  you  pay  in  these  vari- 
ous places  where  you  manufacture?  A.  Both. 

Q.  Was  this  company  formed  by  the  consolidation  of  other 
companies?  A.  Yes,  sir;  it  was  formed  by  buying  out  other 
corporations,  firms  and  individuals. 

Q.  And  is  your  business  confined  to  manufacturing  and  selling 
tobacco?  A.  Yes,  sir. 

Q.  You  run  your  various.  branch  manufacturing  establishments 
yourself?  A.  Yes,  sir. 

Q.  You  have  no  such  arrangement  as  the  National  Cordage 
Company  appears  to  have?  A.  No,  sir. 


By  Mr.  Ahearn. 

Q.  Where  is  your  factory  located? 
ter  and  two  in  New  York  city. 


A.  We  have  one  at 


588 

Q.  Do  you  pay  a  personal  tax  in  the  city  of  New  York?  A. 
Yes,  sir. 

Q.  How  much  ?     A.  I  could  not  say. 

By  Mr.  Guenther. 

Q.  How  ID  any  factories  have  you  in  New  Jersey?    A.  None  at 

present. 

By  Mr.  Malby. 

Q.  Does  your  company  control  the  manufacture  and  sale  of 
tobacco  in  the  United  States?  A.  No,  sir;  not  by  any  means. 

Q.  What,  proportion  of  the  business  do  you  do?  A.  I  could  not 
say;  it  is  a  small  proportion;  I  can  give  you  an  idea;  we  do 
between  twenty-five  and  thirty  millions  of  pounds  of  tobacco; 
and  I  can  name  one  factory  in  St.  Louis  that  does  25,000,000,  and 
there  are  a  number  just  like  that;  Lorillard,  for  instance,  does 
20,000,000. 

Q.  Have  you  any  business  relations  with  either  one  of  those 
corporations?  A.  No,  sir. 

Q.  How  is  it  in  the  State  of  New  York;  what  proportion  of  the 
business  do  you  do  here  in  the  State  of  New  York?  A.  I  could 
not  say;  a  small  proportion. 

Q.  What  amount  of  dividends  have  you  been  able  to  declare 
upon  your  stock?  A.  Eight  per  cent  on  the  preferred  and  twelve 
per  cent  on  Hie  common. 

Q.  Do  you  know  wrhat  your  stock  is  selling  at?  A.  From  107 
to  110,  I  think. 

Q.  Where  does  your  president  and  vice-president  live?  A. 
The  president  lives  in  New  York;  the  first  vice-president  in  Rich- 
mond, Virginia;  the  second  vice-president  at  Rochester;  the  third 
vice-president  at  Baltimore. 

Q.  Your  secretary  and  treasurer?  A.  The  secretary  lives  in 
New  York;  the  treasurer  lives  in  New  York. 

Q.  The  majority  of  your  directors,  are  they  New  Yorkers?  A. 
No,  sir;  they  are  from  various  places. 


589 

John  Rhodes,  called  as  a  witness,  being  duly  sworn,  testified  as 
follows: 

By  Mr.  Hamilton. 

Q.  You  are  a  resident  of  this  city?    A.  I  am. 

Q.  And  you  are  president  of  the  Union  Savings  Bank  of  this 
city?  A.  The  Greenwich  Savings  Bank. 

Q.  Located  where?  A.  On  the  corner  of  Sixth  avenue  and 
Sixteenth  street. 

Q.  With  deposits  amounting  to?     A.  Twenty-five  millions. 

Q.  How  long  have  you  been  connected  with  savings  bank 
systems?  A.  Since  1  Avas  24  yea-re  of  age,  as  a  trustee  of  savings 
bank. 

Q.  How  long  have  you  been  president  of  the  Greenwich  Bank? 
A.  I  think  I  became  president  in  1879. 

Q.  You  have  given  attention  to  the  suggestion  that  has  been 
made  in  regard  to  the  taxation  of  savings  bank  deposits?  A.  I 
have. 

Q.  Will  you  favor  the  committee  with  your  view  in  regard  to 
that  as  to  whether  the  effect  would  be  a  favorable  one  or  the  con- 
trary? A.  I  am  perfectly  willing  to  do  so;  I  might  say  at  the 
beginning  that,  personally,  I  am  opposed  to  the  question  of  per- 
sonal taxation,  and  of  course  to  put  a  tax  on  the  deposit^  in 
savings  banks  is  really  personal  taxation;  1  think  that  is  a  wrong 
principle,  and  especially  when  the  people  who  are  taxed  come  from 
the  poorer  and  the  working  classes;  then,  again,  a  savings  bank, 
it  must  be  borne  in  mind,  is  a  benevolent  institution;  there  is  no 
capital;  there  is  no  benefit  to  be  derived  by  any  of  the  stock- 
holders; it  is  simply  an  institution  in  which  these  trustees  are 
appointed  for  the  purpose  of  taking  care  of  these  savings  as  they 
come  in,  limiting  the  deposits  of  each  individual  to  $3.000;  the 
great  mass  of  these  deposits  are  made  up  from  the  savings  of  the 
poor  people;  I  will  frankly  admit  that,  of  course,  some  little  money 
comes  into  the  banks,  perhaps,  from  a  class  of  people  who  ought 
to  pay  a  tax,  but  even  in  those  cases  a  majority  of  them  come  from 
wages  and  savings;  again,  take  a  State  like  New  York  State,  and 
there  are  a  great  many  people  who  go  on  accumulate  a  few  thou- 


590 

sand  dollars  and  die  leaving  perhaps  $5,000  or  $7,000;  these  people 
are  entirely  incompetent  to  take  care  of  this  money;  they  don't 
know  who  to  trust;  they  don't  know  what  to  put  it  into,  and  they 
distribute  it  through  the  savings  banks  and  they  come  regularly 
every  six  months  to  draw  their  interest;  that  class  of  people 
are  entitled  to  protection  as  far  as  a  tax  is  concerned;  the 
idea  of  taxation  is  to  throw  a  burden  upon  those  who  are 
least  able  to  bear  it;  so,  I  think,  the  reason  that  has  been 
advanced  in  that  direction  has  no  good  foundation;  that  is  my 
own  judgment;  then  back  of  that  again  is  the  fact  that  all  of  this 
money  in  savings  bank  is  already  sdbject  to  taxation  in  theory; 
ever}*  individual  is  subject  to  taxation,  a  personal  tax,  and  to  tax 
deposits  in  a  savings  bank  —  you  can  not  tax  the  bank  because 
there  is  no  capital,  and  there  is  nothing  to  tax;  we  are  simply  the 
custodians  for  these  people;  and,  therefore,  no  tax  in  this  way  is 
practical ;  then  back  of  that  is  the  fact  that  the  State  very  wisely 
surrounds  all  the  investments  in  a  savings  bank;  I  should  say  puts 
a  great  deal  of  protection  around  a  savings  bank  in  this  State; 
I  have  been  trying  for  five  years  to  get  the  scope  extended  because 
I  think  it  is  absolutely  needed;  but  the  result  is  that  we  are 
obliged  to  invest  our  money  for  these  people  at  low  rates  of 
interest;  the  average  rate  of  interest  so  far  as  New  York  State  — 
rather  Brooklyn  and  New  York  city  is  concerned  —  in  the  interior 
of  the  State  it  would  be  perhaps  a  little  better  with  the 
loans  on  farm  property  —  but  the  average  earnings  of  the  savings 
bank  to-day  on  investments  is  three  and  one-half  per  cent;  and 
that  is  what  we  pay  to  our  depositors;  the  surplus  that  we  gather 
is  provided  by  law  simply  as  a  protection,  so  that  in  case  of  any 
loss,  the  declining  of  securities,  or  anything  of  that  kind,  these 
depositors  may  at  all  times  realize  and  feel  that  they  oan  get 
back  100  cents  on  the  dollar  for  every  dollar  they  put  on  the 
bank;  therefore  the  moment  you  tax  you  immediately  reduce  the 
ability  of  the  bank  to  earn  this  money;  then,  what  is  the  result 
of  that;  the  result  of  that  is  to  discourage  the  depositor,  and 
you  leave  those  who  are  intelligent  and  are  anxious  and  want  to 
get  on  and  who  need  their  income  to  secure  investments  else- 
vvhere,  and  they  are  lured  into  all  sorts  of  things;  for  instance, 


591 


take  these  building  and  loan  associations,  which  in  ;ome  respects 
are  good  in  principle,  yet  there  has  been  a  great  deal  of  money 
put  into  these  associations,  and  there  is  a  great  deal  of  money 
going  to  be  lost  in  them;  take  all  these  western  farm  mortgage 
companies;  the  tenement-houses  are  flooded  at  times  with  pros- 
pectuses of  all  sorts  and  kinds  urging  these  people  to  take  their 
money  out  of  the  banks  were  they  only  get  three  and  one-half 
per  cent  and  send  it  out  of  the  State  where  we  give  you  six  per 
cent;  and  the  difference  in  the  interest  is  taken  by  the  men  who 
manage  your  money;  and  the  tendency  of  course  is  to  get  that 
money  out  of  the  bank;  our  theory  is  to  keep  the  money,  as  far  as 
possible,  within  the  State;  their  theory  is  to  give  these  poor  people 
in  return  for  their  deposits  sufficient  to  induce  them  all  the  time 
to  increase  them;  now,  the  result  has  been  in  this  State  at  the 
present  time  that  our  savings  bank  system  which  was  reorganized 
some  fifteen  or  twenty  years  ago,  that  is  under  the  general  sys- 
tem and  undoubtedly  under  the  wisest  laws  of  any  State  in  the 
Union,  that  the  savings  bank  had  gone  on  increasing  until  to-day 
there  is  f 600,000,000  invested  in  the  savings  banks  in  this  State; 
and  it  seems  to  me  a  bad  principle  to  tax  these  people*;  I  am 
thoroughly  in  favor  with  taxation,  but  I  think  we  should  tax 
properly;  I  think  our  laws  are  very  crude;  I  believe  this  question 
of  personal  taxation  as  applied  to  savings  banks  —  I  think  your 
people  would  get  the  benefit  of  it  anyway  if  you  take  off  the  per- 
sonal taxation  of  the  property  in  the  city  of  New  York  the  bonds 
and  mortgages  of  which  the  banks,  certainly  in  these  large  cities, 
hold  something  like  half  of  their  assets,  the  rate  of  interest  on 
these  bonds  would  go  down  half  a  per  cent  the  very  moment  that 
incubus  was  removed,  so  that  people  could  feel  they  could  take 
and  hold  bonds  and  mortgages  and  not  be  liable  for  personal 
taxation,  the  rate  of  interest  would  go  down  at  once;  it  would 
| benefit  the  mass  of  people;  there  is  no  question  about  it  at  all; 
lit  was  said  how  about  the  surplus  in  these  savings  banks;  we 
lean  earn  three  and  a  half  per  cent  including  the  surplus  to-day; 
i  that  is  to  say,  if  we  have  a  surplus,  the  interest  on  the  surplus 
jgoes  towards  the  running  expenses  of  the  bank,  so  we  can  pay  our 
(depositors  three  and  one-half  per  cent. 


592 

By  Mr.  Ainsworth. 

Q.  What  is  the  surplus  of  your  bank?  A.  Two  millions  and 
a  half. 

Q.  What  is  the  average  amount  of  your  deposits?  A.  If  I 
remember  right,  about  $430. 

Q.  Do  you  know  the  rate  of  expense  of  keeping  an  account 
in  your  bank?  A.  I  think  the  expenses  of  our  bank  are  some- 
thing like  $60,000  or  $70,000  a  year  as  against  25,000,000  deposit, 
whatever  the  percentage  would  be;  it  is  very  small;  I  have  seen 
it  but  have  forgotten. 

By  Mr.  Malby. 

Q.  Who  owns  the  surplus?  A.  I  have  been  often  asked  that 
question,  and  have  never  been  able  to  answer  it  satisfactorily;  you 
have  got  to  take  a  plausible  case,  which  is  not  plausible;  thai 
is  to  say,  suppose  the  State  of  New  York  should  pass  a 
forbidding  the  continuation  of  a  savings  bank;  now,  comes  th< 
question  you  have  got  a  surplus  of  2,500,000  which  does  not  belonj 
to  the  trustees,  and  it  does  not  belong  to  the  depositors,  or  th< 
in  the  bank,  because  you  must  remember  that  these  deposil 
change  every  five  years;  the  total  volume  of  our  deposits  ai 
drawn  out  every  five  years;  I  do  not  mean  to  say  every  deposil 
but  there  are  5,000,000  drawn  out  of  our  bank  every  year  an( 
in  five  years  there  are  25,000,000  which  is  the  sum  total  of  oui 
deposits;  it  does  not  belong  to  the  depositors  nor  the  trustees.  mi< 
I  have  always  supposed  that  the  State  would  lay  claim  to 
under  such  a  case. 

By  Mr.  Malby. 

Q.  Why  wouldn't  it  be  fair  to  tax  the  surplus?    A.  The  aiis 
I  make  is  this:  The  small  return  on  the  investments  allowed 
law  to  a  savings  bank  —  we  need  every  dollar  we  can  get  out  ol 
our  surplus  to  pay  the  amount  of  interest  we  are  paying 
depositors  at  the  present  time. 

Q.  Don't  you  pay  the  running  expenses  by  the  difference  be1 
the  rate  of  interest  which  you  pay  depositors  and  that  whic 
you  receive;  doesn't  that  pay  the  running  expenses?    A.  It  woi 


593 

with  our  bank,  but  it  would  not  with  banks  generally  through 
the  Slate;  it  would  with  a  few  large  banks,  but  that  is  lessening 
as  these  old  securities  mature;  all  of  our  new  investments  are 
made  on  the  low  basis;  we  are  investing  on  bond  and  mortgage 
at  four  and  a  half  and  buy  city  bonds  at  three  per  cent. 

Q.  You  say  you  think  the  rate  of  interest  would  probably 
decrease  if  the  taxes  were  wholly  removed  from  personal  property? 
A.  Yes;  on  mortgages. 

Q.  Isn't  it  your  opinion  also  that  if  the  taxes  were  less  on  real 
estate  the  rentals  would  go  down?  A.  No,  sir;  because  you  must 
raise  your  taxation;  perhaps  I  do  not  understand  you. 

Q.  I  understood  you  to  say  that  if  you  relieved  personal  property 
from  taxation  money  would  become  plenty  and  the  rate  of  inter- 
est go  down;  that  would  be  the  natural  effect  if  the  tax  were 
removed  from  real  estate,  wouldn't  it?  A.  No;  I  said  that  if 
you  removed  personal  taxation  the  rate  of  interest  on  bonds  and 
mortgages  would  go  down,  because  bonds  and  mortgages  are 
now  subject  to  taxation. 

By  Mr.  Gruenther. 

Q.  Does  your  bank  pay  anything  on  the  bonds  and  mortgages 
held  by  it?  A.  We  do  not;  we  are  exempt. 

Q.  It  would  not  make  any  difference  to  you  then  whether  that 
was  removed?  A.  Not  as  far  as  the  bank  is  concerned,  except  this, 
that  it  would  lessen  our  ability  to  earn;  we  are  carrying  in  our 
bank  12,000,000  of  bond  and  mortgage  loans,  and  the  average  is 
four  and  one-half  per  cent;  if  you  take  off  the  liability  for  personal 
taxes  as  applying  to  mortgages,  in  my  judgment,  it  would  not 
be  a  year  before  the  rate  of  interest  on  these  loans  would  drop 
four  per  cent;  in  other  words  there  would  be  such  a  demand 
for  investment  on  bond  and  mortgage  owing  to  freedom  from  taxa- 
tion that  the  whole  rate  would  drop  half  a  point,  and  our  bank 
instead  of  getting  four  <ind  one-half  would  only  get  four  per  cent 
on  mortgage  loans. 

Q.  What  effect  would  it  have  to  put  all  the  tax  on  real  prop- 
erty? A.  I  don't  think  it  would  affect  it  at  all;  it  would  soon 
75 


adjust  itself  to  that;  I  have  always  believed  myself  —  this  is 
only  my  personal  opinion  —  that  the  tax  should  be  raised  from  real 
estate;  that  can  not  escape;  it  is  a  fixture;  and  it  ought  to  be 
raised  on  corporate  property,  not  making  it  too  burdensome. 

Q.  Isn't  it  a  fact  that  the  surplus  in  all  savings  banks  belongs  to 
the  depositor  under  the  law  of  the  State  of  New  York?  A.  No; 
I  don't  think  it  does;  it  belongs  to  them  in  one  sense;  let  me  put 
the  question  this  way,  suppose  our  surplus  being  two  and  a  half 
millions  we  should  turn  around  and  pass  a  resolution  to  pay  01 
depositors  ten  per  cent;  my  impression  is  that  the  banking  authori- 
ties would  come  down  upon  us  at  once. 

Q.  Can  you  tell  me  in  what  manner  the  surplus  is  of  any  benefit 
to  the  depositors  ?    A.  Yes ;  it  is  a  benefit  in  two  ways ;  in  the  first 
place  the  interest  upon  the  surplus  helps  pay  the  running  expenses 
of  the  bank  and  helps  us  to  pay  him  a  small  percentage  01 
his  deposit. 

Q.  Let  me  interrupt  you ;  do  you  know  of  any  bank  in  this  S tal 
where  they  have  a  surplus  of  $25,000,  and  in  another  where  the.i 
have  two  millions  and  a  half,  that  the  depositor  in  your  ban] 
gets  any  greater  interest  than  where  they  have  a  surplus  of  25,000' 
Yew;  in  some  cases;  for  instance,  let  me  show  you  the  way 
works;  we  pay  our  depositors  three  and  one-half  per  cent,  ai 
another  bank  will  pay  their  depositors  four  per  cent,  and  il 
ability  to  pay  this  different  rate  is  dependent  upon  its  acti 
net  earnings  after  paying  expenses;  the  greater  liberty  you 
it  to  make  these  net  earnings  larger  the  better  ability  it  has 
pay  a.  larger  interest. 

Q.  Hanks  in  any  city  that  have  not  got  the  surplus  you  liavt 
pay  1'our  per  cent?  A.  The  reason  we  do  not  pay  four  per  cent; 
this,  that  we  found  our  deposits  were  increasing  steadily,  and 
found  the  rate  of  interest  was  going  lower  all  the  time,  and 
feel  that  the  day  will  come  when  our  ability  to  create  the  need( 
surplus  Avould  practically  pass  out  of  existence;  our  ability  t< 
earn  four  per  cent  lies  in  the  fact  that  we  have  got  old  securii 
which  are  running  to  1902  or  1903;  these  old  securities, 
interest  on  them,  do  not  practically  belong  to  the  depositor 


595 

to-day,  because  the  depositors  that  deposited  them,  or  the  great 
mass  of  them,  at  the  time  when  these  moneys  are  invested  have 
drawn  their  money  out,  and  there  are  new  depositors  now,  and 
they  are  not  entitled  to  that  interest;  therefore  it  is  time  for  us 
now  to  increase  our  surplus  and  save  it  while  we  still  have  the 
ability  to  do  it,  and  we  pay  three  and  a  half  per  cent  instead 
of  four. 


i'.y  Mr.  Ahearn. 

Q.  Are  you  in  favor  of  the  bill  now  pending  in  the  Legislature 
giving  savings  banks  the  right  to  extend  their  scope  of  invest- 
ment outside  of  the  State?  A.  Yes. 

Q.  Why  ?  A.  T  will  state  it  as  briefly  as  I  can ;  one  is  to  increase 
the  earning  capacity,  by  giving  us  an'  opportunity  to  invest  our 
moneys  which  we  have  not  got  under  existing  laws;  when  this 
law  was  created  limiting  our  investments  to  "United  States 
government  bonds,  State  bonds,  city  bonds  —  bonds  and  mort- 
gages remained  the  same  —  only  these  three  classes  of  securities 
could  we  invest  in  outside  of  bonds  and  mortgages  —  was  some- 
thing like  2,500,000,000;  the  volume  of  it  has  decreased  until  it 
is  now  less  than  1,000,000,000;  so  you  see  that  while  we  have 
been  L: rowing  we  still  retain  these  narrow  limits;  in  addition  to 
that  the  State  bonds  are  gradually  going  out,  the  cities  and 
States  are  getting  out  of  debt;  on  top  of  that  was  the  fact  that 
in  1907  this  government  debt  became  due,  and  the  question  was 
is  it  wise  to  put  so  large  a  percentage  of  our  assets  in  a  few 
securities;  therefore  we  realized  five  or  six  years  ago  that  there 
must  be  something  done,  we  must  not  only  have  an  additional 
field  for  investment,  but  in  addition  to  that  we  must  have  oppor- 
tunities to  secure  our  risks;  we  must  go  somewhere  where  we 
can  get  absolute  'security. 

By  Mr.  Guenther. 

Q.  Taking  your  bank,  why  is  it  you  can  not  pay  a  fair  tax 
the  State  for  the  protection  you  have  in  view  of  the  fact  of 
|  having  2,500,000  that  concededly,  according  to  your  statement, 


596 

belongs  to  no  one?     A.  My  answer  is  what  I  have  said  before; 
that  the  moment  you  place  a  tax  upon  a  savings  bank  — 

Q.  On  the  surplus?  A.  Well,  a  tax  upon  the  surplus  is  less 
objectionable;  if  you  do  put  on  a  tax  you  only  lessen  the  ability  of 
a  savings  bank  to  pay  the  rate  of  interest  they  are  already  pay- 
ing to  a  depositor;  my  objection  to  it  is  that  it  is  a  personal  tax, 
because  it  is  not  a  tax  against  a  corporation;  it  is  a  personal 
tax  against  individuals  upon  the  poor  people  of  the  State. 

Q.  How  could  it  be  a  tax  upon  the  poor  people  of  the  State 
when  the  poor  people  of  the  State  were  never  known  in  any 
instance  to  get  any  benefit  of  the  surplus  held  by  any  State 
bank?  A.  He  has  no  right  to  it;  the  law  provides,  the  savings 
bank  law  — 

Q.  Can  you  refer  me  to  that  law  that  says  a  depositor  is  not 
entitled  to  the  surplus  of  a  savings  bank?  A.  There  is  nothing 
hi  the  law;  the  law  directs  distinctly  that  the  banks  shall  accu- 
mulate a  surplus,  such  sum  as  they  deem  proper,  for  the  specific 
purpose  of  forming  a  fund  for  the  protection  of  a  depositor. 

Q.  What  would  you  think  of  a  law  of  this  kind  that  every  sav- 
ings bank  in  this  State  having  a  surplus  over  a.  certain  sum 
shall  pay  in  proportion  a  tax  upon  the  surplus  in  addition  to 
that  amount,  say  f  50,000?  A.  I  say  this,  that  if  the  Legislature 
want  to  put  a  tax  in  this  way  upon  the  savings  of  the  mass  ol 
poor  people,  I  have  no  objections  to  it;  it  is  nothing  to  me. 

Q.  How  is  it  the  savings  of  the  mass  of  the  poor  people?  A.  It 
is  part  of  it. 

Q.  They  never  get  any  benefit  of  it?     A.  Yes;  they  do  in  th* 
earnings. 

Q.  You  have  a  surplus  of  two  millions  and  a  half  and  pay  tin 
and  one-half  per  cent  interest;  the  Senator  to  the  right  n-plii 
that  he  knows  a  savings  bank  that  has  f:>."UM)0  and  pays  four  pel 
cent;  that  shows  (he  surplus  has  nothing  to  do  with  it?  A.  Yes: 
it  does. 

Uy  Mr.  Hamilton. 

Q.  Theoretically  it  has,  but  practically  none?     A.  The  Bowi 
Savings  IJank  are  paying  four  per  rent,  because  they  think  ihev 


597 


have   got   surplus  enough;    they  have  been  paying    that  four  or 
live  years. 

Q.  You  said  that  to  tax  the  surplus,  would  be  to  tax  the  poor 
people;  you  said,  furthermore,  you  are  opposed  to  taxing  personal 
property:  it  would  naturally  come  back  then  to  taxing  the  real 
estate?  A.  You  do  it  now,  and  you  should. 

Q.  I>ut  if  you  take  the  tax  now  on  personal  property  off  there 
would  be  an  additional  burden  on  real  estate?  A.  Yes;  that 
should  be  raised. 

Q.  Isn't  it  true  that  it  is  the  poor  people  who  are  go,ing  to 
suffer  by  it  by  put  tins*1  an  additional  tax  on  real  estate?  A.  No, 
sir:  I  don't  see  why;  I  should  not  confine  it  to  real  estate;  the 
reason  I  object  to  a  personal  tax  is  this:  You  can  not  tax  a 
thing  which  is  movable  and  which  can  get  away;  real  estate  you 
can  tax;  you  can  tax  a  city  railroad,  and  they  should  be  taxed 
because  they  have  got  their  rails  down  and  they  are  doing1  busi- 
ness in  the  streets;  you  can  put  a  license  tax  upon  a  business 
house,  because  they  have  got  to  do  business  where  they  are 
located,  and  they  can  not  get  away  from  it;  but  when  you  come 
to  tax  personal  property,  a  man  with  a  knowledge  of  the  business 
world  either  invests  it  in  such  a  way  that  he  is  not  liable  or 
invests  it  in  some  corporate  property  or  some  other  business 
where  you  can  not  tax  him;  take  the  street  to-day;  there  is  no 
tax  put  upon  Wall  street;  you  can  not  reach  them;  the  personal 
tax  is  all  right  if  you  could  only  collect  it,  but  as  it  is  it  results 
in  an  injustice,  and  the  widow  and  orphan  pays  it. 

Q.  What  1  am  trying  to  get  at  is  this:  You  said  that  you  were 
opposed  to  a  personal  tax  because  it  falls  upon  the  poor  people, 
and  on  that  Theory  you  are  opposed  to  taxing  banks;  for  that 
very  reason  you  could  not  be  in  favor  of  putting  the  tax  entirely 
on  personal  property,  because  (he  ultimate  result  of  that  tax  falls 
really  on  the  poor  man;  the  tax  would  have  to  be  raised,  and  it 
would  have  to  be  increased  upon  the  real  estate  in  order  to  make 
up  what  was  lost  by  taking  it  off  the  personal?  A.  No;  L  should 
tax  corporate  property  as  I  have  already  indicated;  1  should  put 


598 

a  license  tax  upon  business;  I  do  not  see  why  there  should  not  be 
a  licence  tax  upon  a  partnership  business. 

Q.  The  trouble  is  that  every  time  we  have  one  interest  here 
they  want  to  put  the  tax  upon  some  other  interest;  they  all  want 
to  escape?  A.  They  wranl  to  escape  if  they  can;  but  they  all  agree 
to  this,  that  the  attempt  to  tax  personal  property  is  a  failure, 
and  that  the  burden  rests  entirely  upon  the  widow  and  orphan; 
it  is  the  estate  that  can  not  escape;  it  is  the  trustee  that  can  not 
escape;  it  is  the  poor  woman  who  can  not  get  away  from  it. 

Q.  Why  not  take  up  the  listing  system?  A.  As  to  the  listing 
system  there  is  simply  this  to  say,  that  it  is  so  obnoxious  that  the 
people  themselves  would  not  stand  it;  they  would  not  submit; 
what  would  you  think  of  a  listing  system  by  which  you  were  com- 
pelled to  reveal  all  the  secrets  of  your  own  means  and  swear  to  it? 

Q.  As  far  as  real  estate  is  concerned  you  are  compelled  to 
reveal  that?  A.  No;  you  are  not. 

Q.  If  I  buy  a  piece  of  property  with  a  mortgage  on,  the  mort- 
gage goes  on  record?  A.  Yes;  the  mortgage  does. 

Q.  And  that  reveals  the  indebtedness?  A.  But  when  it  comes 
to  a  listing  system  that  is  different;  you  remember  how  unpop- 
ular that  was  in  the  war,  and  to-day  the  listing  system  would  be 
one  of  the  most  unpopular  measures. 

By  the  Chairman. 

Q.  You  do  not  think  that  you  can  make  people  honest  by  the 
operation  of  law?  A.  No;  you  can  not  do  it;  if  you  collect  your 
taxes  you  have  got  to  collect  them  by  natural  processes,  and 
that  is  collecting  them  from  places  that  can  not  get  away. 

Q.  The  law  to  be  operative  must  have,  as  matter  of  fact,  the 
support  of  the  people?  A.  I  think  so;  the  lying  and  corruption 
through  a  listing  system  would  be  awful. 

By  Mr.  Guenther. 

Q.  What  do  you  think  of  the  plan  in  Switzerland  that  after 
the  death  of  a  person  it  is  discovered  he  has  made  false  state- 
ments so  far  as  his  property  is  concerned  that  all  the  property 


599 


then  goes  to  the  government;  would  that  be  an  inducement  for 
men  to  be  honest?  A.  It  might  do  for  Switzerland  but  not  for 
America. 

By  Mr.  Ahearn. 

Q.  Do  you  know  any  savings  bank  in  the  city  of  New  York 
that  during  the  past  five  years  has  increased  the  rate  of  interest? 
A.  No,  sir;  they  are  not  able  to  increase  the  rate  of  interest; 
yes,  there  are  several  banks  here  that  have  gone  from  three  and 
a  half  to  four  per  cent. 

Q.  What  are  they?  A.  I  think  the  New  York  Savings  Bank; 
the  Bowery:  the  Bleecker;  the  Seaman's,  and  it  is  our  hope  to  do 
the  same. 

Q.  Inside  of  five  years  is  that?  A.  Yes,  sir;  the  Seaman's  pay 
four  per  cent  on  sums  up  to  $500,  and  three  and  a  half  per  cent 
on  sums  less;  we  should  have  done  it  if  it  had  not  been  that 
we  felt  the  necessity  of  accumulating  a  surplus  out  of  our  old 
securities. 

By  Mr.  Guenther. 

Q.  What  would  you  think  of  taxing  a  foreign  corporation 
incorporated  in  another  State  and  doing  business  in  this  State 
equal  to  that  of  a  corporation  that  is  incorporated  in  this  State? 
A.  I  should  endeavor,  as  far  as  the  law  would  allow  me,  to 
make  them  pay  their  taxation. 

Q.  You  think  that  would  be  fair?    A.  I  think  so. 

Q.  And  you  think  a  manufacturing  corporation  ought  to  pay 
its  proportionate  share  of  the  tax?  A.  I  think  so. 

By  the  Chairman. 

Q.  Have  you  given  any  thought  to  the  subject  of  taxing  — 
to  wrhat  is  called  the  collateral  or  direct  inheritance  tax?  A. 
Well,  only  in  this  way,  that  I  think  it  is  wrong;  I  think  it  is  an 
attempt  to  make  posterity  pay  for  what  the  individual  should 
be  made  to  pay;  under  wise  taxation  laws  you  can  reach  the  mass 
of  the  community  and  they  will  pay  the  tax,  but  after  a  man 


600 


is  dead  to  tax  those  that  follow  after  him  for  his  sins  of  omission 
I  think  is  morally  wrong. 


By  Mr.  Malby.. 

Q.  But  they  do  not  do  that  according  to  the  decisions  of 
court;  as  I  understand  it  they  hold  distinctly  that  a  man's  poster- 
ity had  no  legal  right  to  his  estate  except  under  the  statute,  no 
common  law  right. 

The  Chairman. —  The  State  could  take  it  all,  in  other  words. 

Mr.  Hamilton. —  It  is  not  justified  by  way  of  retaliation  at 
all  under  the  law ;  it  is  simply  unlawful. 

The  v  itiiess. —  Theoretically  that  is  true;  still  the  fact  remains 
that  they  have  to  pay  it;  that  is  about  the  amount  of  it. 

By  Mr.  Malby. 

Q.  What  is  the  total  bank  surplus  in  this  State,  do  you  kn 
A.  About  50,000,000  all  through  the  State. 

Charles  S.  Shivler,  called  as  a,  witness,  being  duly  sworn,  testi- 
fied as  follows: 

By  Mr.  Hamilton. 

Q.  Where   do   you   live?    A.  Brooklyn.- 

Q.  You  are  connected  with  the  American  District  Telegraph 
Company?  A.  Yes,  sir. 

Q.  In   what    capacity?     A.  Secretary   and   treasurer. 

Q.  That  company  is  organized  under  the  laws  of  the  State  of 
New  York?  A.  Yes,  sir. 

Q.  What  is  its  capital  stock  at  present?  A.  Four  million 
dollars. 

Q.  Its  principal  office  for  the  transaction  of  business  is  located 
where?  A.  New  York  city. 

Q.  What  taxes  upon  personal  property  are  paid  by  the  Ameri- 
can District  Telegraph  Company  to  this  Shite?  A.  T  could  not 
tell  you  the  amount,  exactly;  I  do  not  remember;  we  pay.  I  think, 
about  $2,000  a  year  altogether  in  taxes. 

Q.  That  is  the  total  tax,  about  $2,000  a  year?  A.  That  was  the 
amount  previous  to  the  increase  of  capital  stock  which  took  place 
last  year. 


601 

Q.  What  was  the  amount  of  that  increase?  A.  One  million 
dollars. 

Q.  From  three  to  four?    A.  Yes,  sir. 

Q.  Was  your  total  contribution  for  franchise  and  for  the  various 
privileges  you  held  under  this  State  on  your  charter  the  $2,000 
upon  a  capitalization  of  what  was  3,000,000  and  is  at  present 
4,000,000?  A.  Yes;  we  were  paying  as  near  as  I  remember  about 
$2,000  a  year  when  the  capital  stock  was  3,000,000. 

Q.  In  that  $2,000,  do  you  include  also  the  taxes  paid  upon  real 
estate  owned  by  the  company?  A.  The  company  has  no  real 
estate. 

By  Mr.  Malby. 

Q.  What  is  the  rate  of  taxation;  can  you  tell  us?  A.  I  don't 
remember. 

Q.  In  paying  $2,000  you  pay  about  two  per  cent  on  $100?  A. 
Yes,  sir. 

Q.  Do  you  pay  any  tax  on  your  capital  stock?  A.  Yes,  sir; 
that  is  included  in  the  amount  I  stated. 

Q.  Do  you  pay  anything  on  your  dividends;  any  tax?    A.  As 

I  understand  it  the  tax  we  pay  is  a  payment  which  is  based  upon 
the  amount,  on  the  estimated  value  of  the  capital  stock;  we  make 
a  report  yearly  of  the  dividends  paid  and  we  make  an  estimate 
of  the  value  of  the  capital  stock. 

Q.  What  is  the  value  of  your  stock,  that  is,  what  is  it  selling 
for?  A.  I  think  about  fifty-seven. 

Q.  How  much  are  your  dividends?  A.  Last  year  we  paid  two 
and  one-half  per  cent. 

Q.  And  was  last  year  more  or  less  than  the  previous  year?  A. 
It  was  a  little  more;  two  years  before  I  think  we  paid  two 
per  cent. 

Q.  Is  there  any  other  telegraph  company  organized  under  the 
State  of  Xew  York  except  your  own;  how  about  the  Wrestern 
Union;  is  that  a  New  York  State  corporation?  A.  I  think  not; 

I 1  am  not  sure  about  that. 

^' 

OF 

UNIVERSITY 


Q.  Of  course,  you  pay  a  tax  on  your  property  in  the  localities 
where  it  is  located?  A.  Yes,  sir. 

Q.  Its  lines  and  poles  and  so  forth?  A.  The  company  which 
represent  has  no  connection  with  companies  of  the  same  name 
in  other  States  outside  of  New  York;  there  are  several  American 
district  telegraph  companies,  but  they  are  separate  organizations. 

Q.  But  all  under  one  organization?  A.  No,  sir;  they  are  entirely 
distinct  and  separate. 

Q.  These  taxes,  which  you  pay,  the  amount,  does  that  include 
the  taxes  levied  to  others  by  the  different  localities  through  which 
your  lines  pass.?  A.  Our  lines  exist  only  in  the  State  of  New 
York;  while  there  are  American  district  telegraph  companies  in 
other  States  they  are  entirely  independent  of  ours. 

The  committee  then  went  into  executive  session. 


II 


UNIVERSITY  OF  CALIFORNIA  LIBRARY 


